What’s the Deal with Prorating?

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The month of March had to be prorated at 80% because there were about $1 million more needs than shares available. When this happens, needs are prorated. So if you submitted a $10,000 need that would have been shared for March of this year, you should be expecting to get about $8000 in checks from other members. But what about that other $2000 you were hoping for/planning on?

Logically prorating makes a lot of sense. Since Samaritan Ministries is not an insurance company, they are not pooling your money and holding it or investing it for use later on. This means that sometimes the needs may run a bit long one month and shorter the next month. In months where prorating is necessary, every member is notified and has the option to send in extra to Samaritan for the member assistance fund. This fund is used to pay out that remaining 20%. There are lots of ways that remaining 20% is made up. Let’s list them:

  1. It’s possible that April will have fewer needs than normal, so then that portion of the 20% is just rolled to the next month.
  2. Karis Group will often contact the providers of the needs they think they can lower and ask for additional discounts. They are quite successful. This means the 20% is reduced further by whatever discounts were applied.
  3. Samaritan members have shown to be very generous and step up during these times. They do send in to that member assistance fund to cover the prorated needs. A large percentage of that 20% leftover amount is covered in this way.
  4. Some members will discover savings on a completely unrelated bill (like car repairs expected to be (and saved up for) $1000, but the bill was only $500) — the members often apply that $500 savings to their remaining medical bills and take care of it themselves.

Typically it is a combination of all 4 which happens to make up the difference. Let’s not forget that insurance company plans used to have an 80/20 co-insurance level, which leaves the patient with 20% to pay on their own regardless.  Now most insurance plans are either 50/50 or 70/30 which leaves even more for the patient to pay on their own.  So if Samaritan has to prorate, it just means we’re covering our own 20% for a while until the prorata fund has more in it, at which point Samaritan will contact us to see how much we still need and send a check. Typically that remaining 20% is met within a couple of months. In the scheme of things that’s not very long.

Samaritan doesn’t need to prorate very often and each time the members had all of their remaining needs fulfilled. I expect March to be no different. In fact, Since Samaritan started (20 years ago), every single proration has had their remaining needs fulfilled in one way or another. That is remarkable.

Is there a guarantee that all 20% will be fulfilled? No. But I have zero doubt that at least a healthy portion of it will and that means I’m still better off than if we’d had an  insurance company plan and been stuck with the full 20% (or 30% or 50%) no matter what. Samaritan and its members come through. I recently reviewed what Blue Cross had offered us for Obamacare, the horribly high premium still would only give us a 70/30 co-insurance, so we’d have been stuck with even MORE (30%) on our own if we had stayed with Blue Cross. And the bronze level plan they offered us was actually only 50/50 co-insurance, I initially thought it was at least the 70/30.  (Wow, SO happy we switched to Samaritan Ministries.)

Why doesn’t Samaritan just pool the money and fill needs when they have cash? Well, there are two reasons that I know of. One is that the process of pooling money aligns them more closely with insurance companies and that can be a no-no when you aren’t really insurance. Second, paying first come/first serve means that in cases where there’s not enough money coming in, you may have to wait many, many months to get anything paid out at all. That backlog can become quite large. Personally I would rather get the lion’s share of what I need quickly, and have the remainder come later (if given the choice). If I have to wait 6 months to pay my providers anything at all it increases the likelihood of them wondering if I’m a deadbeat, I may get collection calls, a bad mark on my credit history, and/or I may have interest charges start to rack up. By paying them even just 80% within a couple of months they know I’m good for the money, my credit rating with the hospital stays good, and they don’t have to bug me for payment.

Most of the time Samaritan doesn’t have to prorate and full shares are paid from other members about 2 months after needs are submitted and discounts are given. If prorating happens 3 months in a row then guidelines require that a share increase be submitted to members for a vote. If 60% of the membership agrees then the increase becomes official. Increases are usually 10-11% EVERY TWO YEARS ON AVERAGE. Contrast that with insurance companies who tend to have (high) double digit increases every single year. I would suspect we are due for a share increase within the next year simply based on the typical pattern. Higher or more frequent increases are always a possibility as health care costs continue to rise in the US, but members are calling the shots on those with any proposed change requiring a vote. That’s something no insurance company has ever offered.

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