Oregon Cracks Down on Unlicensed Health Care Sharing Arrangements: What Consumers Necessitate to Understand

In a decisive move to protect consumers, Oregon insurance regulators have banned ClearShare Health from operating in the state, marking the first enforcement action against a health care sharing arrangement (HCSAs) since 2021. The decision underscores growing regulatory scrutiny of alternative health coverage models that operate outside traditional insurance frameworks—and raises critical questions for consumers about the risks and legality of these plans.

What Are Health Care Sharing Arrangements?

Health care sharing arrangements (HCSAs) are membership-based programs where participants pool monthly contributions to cover each other’s medical expenses. Unlike traditional insurance, HCSAs are not regulated by state insurance departments, do not guarantee payment of claims and often exclude coverage for pre-existing conditions, preventive care, or certain treatments based on religious or ethical guidelines.

Proponents argue these plans offer lower costs and a sense of community, particularly for individuals facing steep premiums in the Affordable Care Act (ACA) marketplace. Yet, critics warn that HCSAs lack the legal protections of insurance, leaving members vulnerable to unpaid bills, surprise medical costs, and financial instability.

Why Oregon Took Action Against ClearShare Health

The Oregon Division of Financial Regulation (DFR) alleged that ClearShare Health, a Missouri-based nonprofit founded in 2022, was operating as an unlicensed insurer in the state. According to the DFR, ClearShare marketed its plans as an alternative to insurance while functioning like a traditional insurer—collecting premiums, processing claims, and making payments—without complying with Oregon’s insurance laws.

“This action is part of the Division’s ongoing efforts to pursue entities offering health insurance or marketing products that function as health insurance but are not properly licensed,” the DFR stated in its press release. The agency launched its investigation after receiving “multiple consumer complaints” about ClearShare’s practices.

ClearShare Health is affiliated with Clearwater Benefits, a Texas-based company that has faced similar regulatory challenges in other states. In June 2025, Washington state took enforcement action against ClearShare, citing violations of state insurance laws. Oregon’s move signals a broader shift in regulatory oversight, with states increasingly treating HCSAs as de facto insurers when their operations mirror those of licensed carriers.

Key Differences Between HCSAs and Traditional Insurance

What This Means for Consumers

Oregon’s enforcement action serves as a warning to consumers considering HCSAs as an alternative to traditional insurance. While these plans may appear cost-effective, they arrive with significant risks:

• No Legal Recourse: If an HCSA denies a claim, members have no legal avenue to challenge the decision. Traditional insurance plans, by contrast, are required to provide an appeals process under the ACA.
• Surprise Medical Bills: The No Surprises Act, passed in 2021, protects insured patients from unexpected out-of-network charges. HCSAs are not covered by this law, leaving members vulnerable to balance billing.
• Financial Instability: HCSAs are not required to maintain reserves to pay claims. If the plan becomes insolvent, members may be left with unpaid medical bills.
• Limited Coverage: Many HCSAs exclude coverage for pre-existing conditions, mental health care, prescription drugs, or preventive services—benefits that are mandated under the ACA.

How to Protect Yourself When Choosing Health Coverage

If you’re exploring alternatives to traditional insurance, consider the following steps to avoid potential pitfalls:

1. Verify Licensing: Check with your state’s insurance department to confirm whether a plan is licensed to operate. In Oregon, the DFR provides a searchable database of licensed insurers.
2. Read the Fine Print: HCSAs often include exclusions for pre-existing conditions, certain treatments, or high-cost procedures. Review the plan’s guidelines carefully before enrolling.
3. Understand the Risks: Unlike insurance, HCSAs do not guarantee payment. Ask for data on how often claims are denied and what recourse members have if their medical bills go unpaid.
4. Explore ACA Marketplace Options: If you qualify for subsidies, plans purchased through the Health Insurance Marketplace may be more affordable than you think—and come with legal protections.
5. Report Suspicious Activity: If you suspect a plan is operating illegally, file a complaint with your state’s insurance regulator. In Oregon, complaints can be submitted through the DFR’s website.

FAQs About Health Care Sharing Arrangements

Are health care sharing arrangements legal?

Yes, HCSAs are legal in most states, but they are not considered insurance. This means they are not subject to the same regulations, consumer protections, or financial oversight as licensed insurers. Some states, like Oregon and Washington, are taking steps to regulate HCSAs more aggressively when they operate like insurers.

Can HCSAs deny coverage for pre-existing conditions?

Yes. Unlike ACA-compliant insurance plans, HCSAs are not required to cover pre-existing conditions. Many exclude coverage for chronic illnesses, mental health care, or other treatments deemed non-essential by the plan’s guidelines.

What happens if an HCSA refuses to pay a claim?

Members have no legal recourse. HCSAs are not bound by state insurance laws, so there is no appeals process for denied claims. If a claim is rejected, the member is typically responsible for the full cost of the medical bill.

How do HCSAs compare to short-term health plans?

Both HCSAs and short-term health plans are alternatives to traditional insurance, but they differ in key ways:

• Short-Term Plans: These are temporary insurance policies that provide limited coverage for a set period (usually less than a year). They are regulated as insurance in some states but often exclude pre-existing conditions and essential benefits.
• HCSAs: These are not insurance at all. They rely on voluntary contributions from members to cover medical expenses, with no guarantee of payment.

What should I do if I’m already enrolled in an HCSA?

If you’re enrolled in an HCSA, review your plan’s guidelines to understand what is and isn’t covered. Consider exploring ACA-compliant insurance options during the next open enrollment period, especially if you qualify for subsidies. If you have concerns about your plan’s legality, contact your state’s insurance regulator for guidance.

The Future of Health Care Sharing Arrangements

Oregon’s enforcement action against ClearShare Health reflects a growing trend of states tightening oversight of HCSAs. As health care costs continue to rise, regulators are increasingly scrutinizing alternative coverage models to ensure they do not mislead consumers or operate outside the law.

For consumers, the message is clear: while HCSAs may offer lower upfront costs, they come with significant risks. Before enrolling in any health coverage plan, it’s essential to understand the trade-offs—and to verify that the plan is operating legally in your state.

Key Takeaways

• Oregon has banned ClearShare Health from operating in the state, alleging it functioned as an unlicensed insurer.
• Health care sharing arrangements (HCSAs) are not insurance and lack legal protections for consumers.
• HCSAs can deny claims for any reason, including pre-existing conditions, and offer no recourse for members.
• States like Oregon and Washington are increasing regulatory scrutiny of HCSAs to protect consumers.
• Consumers should verify a plan’s licensing status and understand the risks before enrolling in an HCSA.