How Does Medical Cost Sharing Work?
What is Medical Cost Sharing?
Medical Cost Sharing is a non-insurance solution for managing large and unexpected healthcare costs. This solution has a long history of success, and it’s based on the belief that a community united in shared values can accomplish great things.
If you’ve never heard the term “Medical Cost Sharing” before, you’re not alone. Medical Cost Sharing, sometimes known as Health Sharing or “MCS,” is part of the Sharing Economy movement, which is a model of cost sharing where community members come together and contribute funds, agreeing to help each other shoulder the burden of payment. Other examples of the sharing economy include Airbnb, Upwork, Uber and those Little Free Libraries in your neighborhood.
How does it work?
Unlike insurance, Sedera Medical Cost Sharing doesn’t involve the transfer of risk. There are no policies, underwriters, riders, or networks to deal with. Members of the Sedera Community voluntarily share monetary contributions with one another using FDIC-insured bank accounts, and these shared contributions are used to help Members pay for large, unexpected medical expenses.
When a Member joins Sedera, they select their Initial Unshareable Amount (IUA), which is the amount they feel comfortable paying per injury, illness or medical event without help from the Community. Members make monthly contributions to the Sedera Community, and when a Member experiences an eligible medical Need, they pay their medical provider directly. First, with their own money (their IUA), and then with shared funds. There are no insurance cards or networks; members identify themselves as cash pay (or self pay) patients to their medical professionals, and members seek competitively priced medical facilities and professionals, when possible, to ensure all Community members benefit from the best value.
What does it mean to be a Cash Pay patient?
“Cash pay,” sometimes referred to as “self pay,” means that you pay your doctor or medical professional directly. Medical Cost Sharing deviates from the health insurance model in some significant ways, and an important difference is the cash pay status of Medical Cost Sharing members.
When a Sedera Member experiences a Need, they pay their doctors directly for medical services rendered. Some providers ask for payment up front, which Sedera can assist with if needed, but most send a bill to pay after treatment. More often than not, these bills are negotiable. After reaching their IUA for eligible Needs, the Member continues to pay these bills directly, but now they use shared funds.
How does Sedera Medical Cost Sharing work?
Enroll. This includes:
Selecting your IUA and Membership type.
Reading and agreeing to Sedera’s Membership Guidelines which include the Community Principles of Membership. Sedera is an inclusive Community and does not have religious requirements for Membership.
Opening an FDIC-insured account for sharing with Sedera’s banking partner (the account application is conveniently included in the enrollment process).
Contribute. Each month, you contribute a membership fee to the Community.
Experience an Eligible Medical Need. Should an illness, injury or medical event occur, you will open a Need on the Member Portal.
Pay Your Medical Bills. As a cash pay patient, you’ll pay your doctors and medical professionals directly. This means you can choose your doctors without worrying about being out-of-network.
Upload Medical Bills. As you visit medical professionals and receive care, you’ll upload your itemized bills to the Member Portal under the related eligible Need you previously opened.
Meet your IUA. Once you incur the amount you chose as your Initial Unshareable Amount (IUA) — remember, that’s the amount you feel comfortable paying without help from the community — the Need is fully shareable.
Receive Shared Funds. Unlike an insurance deductible, your IUA does not reset after a year. After you meet your IUA for the Need you opened, you’ll use shared funds for all further eligible medical bills related to that specific Need.
Experience Additional Needs. Your IUAs are limited to three per membership year. After that point, your IUA is $0 for any additional eligible Needs (as determined by the Membership Guidelines). This is the Sedera Community’s way of supporting and helping a Member who’s clearly having a tough year!
Throughout this process, Sedera’s Member Services team is available to help you at any step. From enrollment to bill negotiation, they’re just a phone call away.
Cash Pay in action
Confused? No worries! If you’re accustomed to dealing with health insurance, the idea of Medical Cost Sharing may be a new concept. Below is a hypothetical example that mirrors a real Member’s experience. We’ll call this Member Kate Bishop.
Kate is a 28-year-old freelance graphic designer who lives in Austin, Texas. She joined Sedera last year after a friend recommended it as a more affordable alternative to health insurance. When Kate enrolled, she chose an IUA of $1,500 (Sedera has five IUAs to choose from beginning as low as $500). Her monthly contribution is $195, which is automatically deposited into the FDIC-insured bank account that she opened during enrollment.
Kate is very active. She loves archery, martial arts, running and skiing. Last month, while on the slopes in Boulder, Colorado, Kate fell and hurt her knee. Back at home, after it hadn’t improved, she scheduled an appointment with a physician. Because Kate is a Sedera Member, before her visit she identified herself as a cash pay patient and confirmed the cost of the appointment to be $200. At her doctor’s visit, the physician prescribed an arthroscopy and gave her the name of a recommended surgeon.
After the appointment, Kate opened a Need on Sedera’s Member Portal and uploaded her first doctor bill. Her first $200 payment was credited toward her $1,500 IUA. Kate's Needs Coordinator reminded her about Sedera's pre-surgery requirement, which is a consult with Sedera’s Expert Second Opinion program. This program provides Members with access to some of the nation’s top doctors who will provide an unbiased second opinion at no additional cost. She was able to schedule her virtual consult within the next week.
Next, she researched surgery options to determine the average cost for the surgery she needed. She found a highly rated, experienced surgeon who specialized in the surgery and who also charged less than the average cost, specifically giving discounts to cash pay patients. To double check, Kate called Sedera Member Services and they confirmed that she’d found a great option. Kate’s provider offered bundled pricing, so she only had to pay once for the associated professional, facility and anesthesia charges. She made an agreement with her doctor to pay for services after the procedure was completed.
The surgery was a success and Kate did 10 weeks of physical therapy afterward. She uploaded her itemized receipts on the Sedera Member Portal to be considered for sharing. The total cost for the arthroscopy was $5,000. Because Kate was still responsible for $1,300 of her IUA (less the $200 she paid initially), $3,700 was transferred into her personal bank account. Her physical therapy bills were fully shared because her IUA was met, and they didn’t exceed her PT sharing limit of $3,000. Kate paid her bills and was back on the slopes the following year.
As a cost-conscious Sedera member, Kate shopped around for a good price and saved the Community money. Shopping for care is an important part of keeping costs low for each Member, and for the Community at large. Equally important, it promotes price transparency, which is an important part of changing our broken healthcare system.
Where do you start?
During enrollment, Sedera Members complete three key steps:
Create an account. All Members create an FDIC-insured Medical Cost Sharing Bank account with our trusted banking partner, Austin Capital Bank (ACB). The account application is conveniently included in the Sedera enrollment and does not require a visit to the bank. The bank account allows Members to begin sharing funds for medical expenses. This is an important guardrail to ensure Sedera’s cost sharing model operates properly by verifying that medical funds are shared directly from one Member’s account to another.
Read the guidelines. Enrolling Members will be asked to read and agree to Sedera’s Community Principles of Membership and explore the Membership Guidelines. The Community Principles of Membership underscore the importance of understanding the role of the Member and the power of the Community. The Membership Guidelines outline what is eligible for sharing and the terms of membership.
Disclose health history. Enrolling members disclose health history for themselves and any other Members in their household who are included in their Membership. Disclosing health history allows the Community to uphold fair and equal sharing Guidelines for concerns such as pre-existing conditions, tobacco/vape usage, etc.
The concept of Medical Cost Sharing has been highly successful for over 25 years. At Sedera, we believe that a community of health-conscious people who care for one another can successfully participate in the sharing of each other’s medical burdens.
We believe in Members helping Members, working together to support one another. And we believe that we can disrupt the status quo and change a broken healthcare payment system for the better.