Retirement planning brings a lot of numbers to the table. You’ve likely spent years thinking about your 401(k), Social Security benefits, and how to make your nest egg last. But one of the biggest and most unpredictable expenses for seniors is health care. As you look at your options, you may have come across a different model: health care sharing.
For many seniors, health care sharing ministries like Medi-Share offer a way to manage medical costs that aligns with their faith and their budget. It’s not insurance, but a community-based approach where members share in each other's eligible medical bills. If you're considering this path, it’s smart to think about how it fits into your overall financial picture.
Here are some practical financial planning tips for seniors exploring health sharing.
1. Understand the Full Cost
With traditional insurance, you have premiums, deductibles, co-pays, and out-of-pocket maximums. Health care sharing has its own set of terms. To plan your budget accurately, you need to know what they are.
- Monthly Share: This is the amount you contribute each month, which is then used to help other members with their medical bills. It’s similar to a premium but is typically lower than unsubsidized insurance premiums.
- Annual Household Portion (AHP): This is the amount your household is responsible for paying on your own eligible medical bills before the community begins sharing. Think of it like a deductible. Once you meet your AHP, sharing begins for eligible needs.
- Non-Eligible Expenses: Health sharing programs have guidelines for what kinds of bills can be shared. Routine check-ups, for example, are often not shared because they are predictable expenses you can budget for. Make sure you know what's eligible and what isn't, so you can plan for those out-of-pocket costs.
When you add up your monthly share and budget for your AHP and routine care, you get a clearer sense of your total potential healthcare spending for the year.
2. Align Your Budget with Your New Costs
Once you have a handle on the costs, it’s time to adjust your retirement budget. For many seniors on a fixed income, the potential for lower monthly costs is a major draw for health sharing.
Sit down and look at your income sources like Social Security, pensions, investment withdrawals, and compare them against your expenses. Where does health care sharing fit? The money you save on monthly contributions compared to traditional insurance premiums could be reallocated. Perhaps it goes into a dedicated savings account for your AHP or other out-of-pocket medical costs. It could also free up funds for travel, hobbies, or giving.
3. Build a "Health Care Emergency" Fund
Even with a great plan, unexpected medical situations can arise. Since health sharing isn't a guaranteed contract like insurance, having a personal financial cushion is wise. This isn't about a lack of faith in the community; it's about being a prudent steward of the resources God has given you.
Consider setting up a separate savings account specifically for medical needs. This fund can be used to cover your AHP, pay for non-eligible expenses, or provide a buffer if a large, unexpected bill occurs. It gives you peace of mind, knowing you are prepared without having to dip into your primary retirement savings.
4. Factor in the Community Aspect
One of the most significant differences between insurance and health care sharing is the community. At Medi-Share, members not only share financially but also pray for one another. This support system is an invaluable asset that doesn’t show up on a budget spreadsheet.
From a financial perspective, this community can sometimes help in ways beyond the official guidelines. While not guaranteed, members have been known to help each other with needs that may not be eligible for sharing. More importantly, the emotional and spiritual support can reduce the stress and anxiety that often accompany health challenges, and that's a benefit you can't put a price on.
5. Review Your Plan Annually
Your health needs and financial situation can change from year to year. Just as you would review your investment portfolio, make it a habit to review your health care sharing plan annually.
- Does your current AHP level still make sense for your budget?
- Are your monthly contributions manageable?
- Have your health needs changed in a way that might affect your costs?
An annual check-in ensures your healthcare approach continues to serve you well throughout your retirement years.
A Path Forward in Faith and Finance
Choosing how to manage your health care costs in retirement is a big decision. For many Christians, health care sharing offers a powerful combination of financial stewardship and community fellowship. By taking the time to understand the costs, adjust your budget, and plan ahead, you can move forward with confidence knowing you are making a wise choice for both your health and your finances.
