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Freedom for Retirement™ is the podcast designed to help you move beyond the fear of the complexity of finances so you can be financially free to achieve personal significance. Tune in with Josh Duncan each week to turn fear into fuel that drives you into Freedom & Significance.
Welcome to the Freedom for Retirement podcast. If you're a high earning professional, business owner, or someone approaching retirement and wondering whether you are truly on track, you are in the right place. This podcast is all about helping you make smart, confident financial decisions without the fear, confusion, or sales pressure that so often comes with money advice. Each episode is designed to break down complex topics like retirement planning, investing, taxes, and cash flow in plain English so you can understand what really matters and avoid the most common and costly financial mistakes. Everything you hear here is educational, fiduciary focused, and grounded in real world planning experience working with clients just like you.
Josh:I'm your host, Josh Duncan, partner at F5 Financial Planning. Let's get started. Health insurance is expensive. And for a lot of people, it feels like you're paying more and getting less every single year. You've probably asked yourself at some point, is there another way to handle major medical costs without paying these massive premiums?
Josh:Well, there is, but it's not widely understood. I'm Josh Duncan, partner at F5 Financial Planning, where we take a fiduciary approach to maximizing our clients' wealth. In this video, I'm going to break down what health sharing plans actually are, how much they cost, what they typically cover, and most importantly, what you actually need and don't need when it comes to health care coverage. Because when you understand how this works, you can make smarter financial decisions, lower your monthly costs, and still protect yourself from the things that could truly derail your financial plan. Let's dive in.
Josh:Let's start with the basics. What exactly is a health sharing plan? In a high level, a health sharing plan is a community based system where members contribute money each month, and those funds are used to help pay for other members' eligible medical expenses. Now the first and most important thing to understand is this. This is not traditional insurance.
Josh:There is no insurance company taking on risk in the way you're used to. Instead, it's a collective pool of people agreeing to share large health care costs with one another. Most of these plans are either faith based or values based communities. That means when you join, you're typically agreeing to certain guidelines, things like lifestyle choices, health behaviors, and sometimes even philosophical beliefs about health care. Now, let's talk about how it actually works.
Josh:Each month, you make what's called a contribution. It looks and feels similar to a premium, but technically, it's not insurance. Then you have what's called an initial unshareable amount. Think of this like a deductible. This is the amount you were responsible for before the community begins sharing your medical expenses.
Josh:The initial unshared amount for some programs is at the family level, and others use event based unshared amounts. Once your medical costs exceed that threshold and they meet the plan's eligibility guidelines, the remaining expenses are shared among the community. So instead of an insurance company paying claims, you're essentially participating in a structured system where members support one another financially. Now, that sounds simple, but where people get confused is what these plans are actually designed to do. Health sharing plans are built for one primary purpose, protecting you from large unexpected medical expenses.
Josh:We're talking about things like hospitalizations, surgeries, major illnesses, or serious injuries. These are the kinds of events that can cost tens of thousands, sometimes hundreds of thousands of dollars. And that's really the key idea here. This is not designed to cover every doctor visit, every prescription, or every routine expense. In fact, you need to be comfortable presenting yourself as a cash pay patient for your basic medical visits like physicals, urgent care, and sick visits.
Josh:You will be surprised to see the amount providers charge you when paying cash is 50% of what they bill insurance companies. These plans are designed to protect you from financial catastrophe. Think of it this way. If healthcare were like car ownership, traditional insurance is trying to cover oil changes, tire rotations, and washes, and catastrophic expenses. Health sharing plans are focused on the total loss accident.
Josh:And from a financial planning perspective, that distinction matters a lot. Because one of the biggest mistakes people make is trying to ensure everything instead of protecting against the things that would truly derail their financial future. Now let's talk about cost, because this is where a lot of people start to pay attention. Health sharing plans typically have lower monthly contributions than traditional insurance. For individuals, you're often looking at somewhere between about $150 to $400 per month.
Josh:For families, that range is usually around 400 to $1,200 per month. Now those numbers can vary depending on age, household size, and the specific plan you choose. But generally speaking, they are significantly lower than many traditional health insurance premiums. But, and this is important, there is a trade off. Remember, that initial unshareable amount we talked about, that's typically gonna range anywhere from $1,000 to $10,000, sometimes even higher.
Josh:So what you're doing is lowering your monthly costs in exchange for taking on more responsibility upfront if something happens. And this is where financial planning really comes into play, because this structure works best when you have the ability to handle that initial responsibility amount without financial stress. In other words, you're self insuring the smaller risks and using the plan to protect against the big ones. Let's walk through a simple example so you can see how this works in real life. Let's say you have a health sharing plan with a $5,000 initial unshareable amount, and you end up needing a surgery that costs $25,000 In this case, you would be responsible for the first $5,000.
Josh:That's your portion. Then assuming the expense meets the plan's guidelines, the remaining $20,000 would be eligible to be shared among the community. So instead of facing the full $25,000 bill on your own, you've effectively limited your financial exposure to that initial amount. And that's the entire purpose of this strategy. It's not about eliminating all healthcare costs.
Josh:It's about protecting you from large financial shocks that could disrupt your long term financial goals. Now, this is where things get really interesting, and honestly, where a lot of people can dramatically improve their financial efficiency. Because once you understand the health sharing plans are designed for major medical events, you start to realize something important. You don't need to bundle every type of health care coverage into one big expensive insurance package. Let's break that down.
Josh:First, prescriptions. Most people assume they need insurance to afford medications. But in reality, many prescriptions are actually cheaper without insurance. There are programs like GoodRx, Byzure, and Buzz Rx that offer discounts, sometimes up to 80% on common medications. And these are accepted at most major pharmacies.
Josh:In many cases, the discounted cash price is lower than what you would pay through your insurance co pay. Plus, when you include the cost of the premiums for the prescription coverage, you might be paying more than you think. So instead of paying higher premiums to have prescription coverage bundled in, you can often handle this category much more efficiently on your own. Next, dental. This one surprises a lot of people.
Josh:Dental insurance often costs about the same as just paying for your care out of pocket. When you look at the numbers, the annual premiums you pay for dental insurance are often very close to the cost of two cleanings and standard x rays. So what are you really gaining? In many cases, not much. Maybe a discount on other procedures.
Josh:An alternative to use is a dental discount program. If you're paying cash, ask your dental office for the discount programs they work with and research the options. These discount plans typically cost less than traditional insurance and still provide reduced rates on service. If the discount offered is more than the cost of the plan, it's probably a good idea to purchase. You will still directly pay out of pocket for your dental services, but the cost would be about the same as the dental insurance premiums.
Josh:From a financial planning standpoint, dental care is usually a predictable, manageable cost, not something that requires insurance. And then there's vision. Vision insurance is probably the clearest example of something that sounds valuable, but often isn't. The premiums you pay are typically very close to the cost of an annual eye exam and basic fitting of glasses or contacts. As long as you leave the doctor's office with your vision prescription, you can purchase your contacts and glasses wherever you want.
Josh:Personally, I buy my contacts and glasses from online providers. So again, you're not really transferring risk. You're just prepaying for expected expenses, often with added complexity. In most cases, paying cash for vision care is just as effective and sometimes more flexible. So when you step back and look at all three of these areas, prescriptions, dental, and vision, you start to see a pattern.
Josh:These are not large, unpredictable financial risks. They're manageable, predictable expenses. And financially, those are usually better handled outside of insurance. Now, before you go making any changes, we need to talk about one very important consideration, employer sponsored health insurance, because this can completely change the math. If your employer is subsidizing a significant portion of your health insurance premium, that is essentially free or discounted money.
Josh:And in many cases, it makes traditional insurance the most cost effective option. But there's another layer here that people often overlook, taxes. Employer sponsored health insurance premiums are typically paid on a pretax basis. That means the money comes out of your paycheck before Social Security, Medicare, federal, and state taxes are applied. So while you might see a certain number on your paycheck, your true cost is actually lower because of those tax savings.
Josh:And depending on your income, that difference can be meaningful. So anytime you're comparing options, you need to look at your net cost, not just the sticker price. Because what looks cheaper on the surface isn't always cheaper in reality. Who are these plans actually a good fit for? Well, generally speaking, they work best for healthy individuals or families who don't expect to have frequent medical expenses.
Josh:They're also a good fit for people who are comfortable taking on some level of financial responsibility in exchange for lower monthly costs. And often, they appeal to people who are looking for a more intentional values based approach to healthcare. Finally, health sharing plans are good for people who want a more hands on role in their health management. Since there are no networks and you can use any provider who will accept self pay patients, you will need to research what primary care, dentist, and eye doctor to use. Also, when you do need to make a claim, there will be forms for you to complete, and you will need to collect itemized receipts from the providers.
Josh:There is no doubt you will have a deeper understanding of your full cost of your health care. On the other hand, if you have ongoing medical needs, require frequent care, or prefer highly predictable structured expenses, these plans may not be the right fit. Because again, they are not designed to cover everything. They are designed to protect against the big things. Check out my video comparing traditional health insurance with health sharing plans for more information.
Josh:Let's bring this all together. First, health sharing plans are not insurance. They are a community based approach to handling major medical expenses. Second, they are designed to protect you from large unexpected costs, not everyday health insurance spending. Third, they often come with lower monthly costs, but higher upfront responsibility.
Josh:And fourth, you don't need to bundle everything. Prescriptions, dental, and vision can often be handled more efficiently outside of traditional insurance. And finally, always consider your employer benefits and tax situation before making a decision because those factors can significantly impact your true cost. At the end of the day, this isn't about finding a one size fits all solution. It's about understanding your options and building a strategy that aligns with your financial goals, your risk tolerance, and your overall plan.
Josh:That's the fiduciary approach, and that's how you make smarter decisions with your money. If you found this episode helpful, please consider subscribing to the podcast and leaving a review. It helps more people find the show and continue learning how to make smarter financial decisions. I'm Josh Duncan, partnered F5 Financial Planning. If you would like to learn more about how we help our clients achieve financial freedom for personal significance, visit our website at www.f5fp.com.
Josh:Thanks for listening, and I'll see you in the next episode.