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Co-Op Health Insurance Plans | Healthcare Cooperative Pros & Cons

Agnus Smith Published: June 14, 2018 Updated: February 28, 2019

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Today, healthcare costs are running rampant, with no signs of letting up anytime soon. While most Americans are conceding, learn how some of the most savvy consumers are successfully leveraging co-op health insurance plans in an effort to reduce their medical expenses.

What Are Co-Op Health Insurance Plans?

In order to gain a better understanding of how these cooperative healthcare plans work, let’s first start by defining what co-op stands for. While the term may wear many hats, depending on the industry you are in, in the health insurance industry, co-op stands for Community Operated and Oriented Plan Program. The community health coverage option is known by a handful of other names as well, such as medical cooperatives and healthcare co-ops.

So, what exactly are these co-op plans, and how do they save you money?

For starters, health insurance co-ops are private health insurance plans that serve a small group of people, and are owned and operated by the members of said group. The structure of medical cooperatives categorize them as a type of mutual insurance plan.

Mutual insurance refers to plans that are owned and operated by the members of the group that own the plan. All of the money that is earned by the group directly benefits its members by reducing costs (e.g. premiums), being distributed to the members, or being held within the group to benefit the entire group, which is why co-op health insurance plans are so affordable.

Who’s Owns Healthcare Cooperatives?

Health insurance cooperatives are owned by companies, small markets, and other groups, and can be private or public entities. Additionally, these groups can operate on a national, state, or local level. The owners can be medical professionals and healthcare businesses (e.g. hospitals, health clinics, charities, etc.). Though there are owners of the plans, there are no hierarchies. The owners are also members themselves, and do not receive better benefits or preferential treatment for being the one charge.

Cooperative health members

How It All Works

We touched about the inner workings of health co-ops briefly, but let’s take a deeper dive in to fully understand whether or not this is the right option for you.

As mentioned above, co-ops are owned and operated by their members. Meaning, if you are enrolled in a co-op health insurance plan, you are essentially a stakeholder in that plan, making you a partial owner. This is sometimes referred to as member-owned health plans.

The size of healthcare cooperatives vary, with some of the largest in the country boasting tens of thousands of members. The more members enrolled in these health insurance co-op plans, the more the costs get spread out, which helps drive down the overall expenses members will have to pay.

For example, if there are ten members enrolled in a co-op insurance plan, and one requires back surgery for a shocking $20,000, each member will have to pay $2,000. Now, in this particular situation, being part of a medical cooperative doesn’t seem so appealing, but imagine if that same surgery was split among ten thousand members. Everyone would end up paying an extremely affordable $2.

Another example would be a cooperative health plan owned and operated by an organization of senior citizens in a particular state. The medical co-op is organized by a geriatric doctor. The members of the plan are all over the age of 62 years old, and they all decide to cover all doctors, treatments, and procedures that are most common to their needs as senior citizens.

Additional Savings

Since co-ops are owned and operated by members, they also save you money by eliminating the need for high administrative costs. There are no third parties that need to be paid out, CEOs that need a high salary, or marketing expenses to worry about. Therefore, all the money collected can be allocated to the medical costs incurred by members.

Furthermore, since medical cooperatives are not considered for-profit, they only collect money when they need it. Meaning, they won’t take extra money in premiums that aren’t being used and line their pockets like most private health insurance companies. This passes savings on to you, and also removes any tax liability, further reducing your costs.

How Much Will It Cost You?

Health insurance co-ops are significantly cheaper than regular health insurance. The monthly fees are called membership fees, not premiums. The average cost of a membership fees run about $40 to $90. To put that into perspective, regular COBRA insurance premiums can cost as much as $650 per month.

Self-employed individuals are notorious for having expensive monthly premiums because they do not receive health benefits through their job, which is why they are the most common members of health insurance co-ops. You most likely will not receive poorer coverage as a co-op member. The coverage that you can receive as a member is medical, dental, prescriptions medications, and any other form of healthcare that is typically covered by a regular health insurance plan. In some cases, the coverage you can receive from a co-op plan is the same if not better quality than plans from reputable insurance companies.

Co-Op Pros And Cons

Though affordable health insurance that covers almost as much- if not just as much- as a regular insurance plan sounds appealing, being a part of a health insurance cooperative is not for everyone. The downfalls of being a part of a self-governed group may outweigh the benefits for you. It up to you to weight out the pros and cons of being a part of a medical cooperative if for you.

Health Co-Op Pros

Affordable cost and optimal coverage is definitely a benefit to enrolling in one of these plans. The earnings of the group are held inside the group to benefit the group as a whole. The plan being exclusive to a small group of people allow for the common necessities to be covered because the group can narrow down their necessities and has more profit to cover their necessities.

The nonprofit aspect and self-regulation aspect go hand-in-hand. Being non-profit means they are not regulated by the government or major corporations. Since the plan is owned and operated by its members, not the government or major corporations, the coverage is based on the needs of the members because the members can control what is covered and what is not.

Health Co-Op Cons

Being a part of a group that you have to conform to the group. For example, if you are a member of a faith-based or politically-based health insurance co-op, you may not be able to receive coverage for procedures, medications, doctors, and clinics that are against the groups’ common beliefs. The majority rules, and if you do not agree with the majority, you are out of luck.

Co-ops lack government oversight and incentive for competition. Since they are not supervised by the government, co-ops will fail if they run out of funding because they can not receive government assistance (e.g. loans) as major insurance companies can. Health co-ops will not be driven to improve because they are not competing with other major companies.

Where To Look

You can find co-op health insurance plans the same way you find traditional health insurance plans. A quick search will pull up local co-op options in your area, and you can even find co-op health insurance plans through the ACA marketplace.

Because many co-op health plans are religiously based, you also may be able to talk to anyone at your local church to see if they have any recommendations. Ask around your community and circle of friends to see what co-op plans they may be enrolled in, along with getting a good idea of how well these plans would fit your needs.

List Of Health Insurance Co-Ops

Unfortunately, the list of co-op health insurance companies is a relatively short one, as few have found enough success to stay afloat. The following list of co-op health insurance companies includes both past and current plans.

Co-Op Health Insurance Quotes And More

FirstQuote Health is a simple, user-friendly tool that you can use to get insurance quotes. FirstQuote Health can provide you with a free quote to find co-op health insurance. You can also use FirstQuote Health if you are interested in getting quotes for regular health insurance.

The first step to getting free health insurance quotes is to go to the FirstQuote Health website and enter your zip code. After your location is confirmed, you will select your preferences regarding a plan and your personal needs. The site will take a few minutes to process and then give you a list of deals and plans that will be best for you.

Health insurance co-ops are an excellent way to get affordable health insurance that is of the same quality as the plans from most reputable insurance companies. You may have more of your health needs covered because the plan is owned and operated by its members.

However, you must weight out the pros and cons to determine if joining a co-op plan is best for you. If you decide that it is or are interested in another type of insurance plan, use our free quoting tool to find your perfect plan today!