These aren’t health insurance:
Medical discount plans
Health discount plans
Discount health cards
Discount medical cards
Medical discount plans/cards are not health insurance
These plans can help you save money on out-of-pocket costs by giving you access, for a fee, to a list of health care providers who have agreed to offer their services at a discounted rate. But unlike true health insurance, these plans do not actually pay medical claims. You’ll still have to pay the entire bill yourself.
Before you purchase a discount plan:
- Read the fine print carefully
- Ask to see a list of providers. If the company refuses, walk away
- Verify that the company has a Web site and toll-free customer service number
- Research consumer complaints against the company with your state department of insurance and/or the Better Business Bureau
- Resist any high-pressure sales tactics, particularly deadlines and limited-time offers
- Investigate claims that seem exaggerated (in the words of the National Association of Insurance Commissioners, “If it looks too good to be true, it probably is.”)
- Do the math: will the potential savings justify the fee?
With health care costs rising everywhere and insurance premiums following apace, more and more consumers have begun to take a closer look at these cards. For the insured, they hold the promise of reduced costs, and for the uninsured, particularly those who can’t get coverage or can’t afford it, such plans amount to ‘the next best thing.’
Honest sellers of the plans are forthright about the fact that they’re not selling actual insurance. Many will come right out and say, “This is NOT health insurance.” (In fact, that could be a useful test of the trustworthiness of a plan provider. If the company isn’t honest about what it is and isn’t selling, keep moving; but if they are, give them a second look.)
Throughout the years, many financially pinched consumers have been deceived, often with exaggerated marketing hype, obscured fine print and calculated omission, into thinking that what they were buying was health insurance. Some even bought medical plans that proved to be entirely worthless, nothing more than an elaborate scam.
Until recently, the market for products like these was like the Wild West: lawless and filled with snake-oil salesmen preying on unsuspecting consumers. While this unruly scene has improved in the last few years, with many state legislatures enacting consumer protections and weeding out unscrupulous providers, there are still many fraudulent and deceptive actors out there. Each year, thousands of American consumers report having been sold the equivalent of a bag of wooden nickels.
What’s more, until states play regulatory catch-up, many consumers will find they have no recourse if they are bilked by misleading discount-plan sellers. (Real health insurance, on the other hand, is regulated by each state and sold under a rigorous system of consumer protection.) More and more states, we’re happy to report, are stepping up their oversight, putting tough restrictions on sellers and giving fleeced consumers a better shot at compensation. In April 2008, Texas, which has the largest population of uninsured in the nation and is thus particularly attractive to unscrupulous companies, instituted a licenses scheme for discount plan providers.
But there is still room for improvement, and the industry has a long time before it can regain the trust of consumers. Until then, caveat emptor. A medical discount plan, aka health discount plan, health discount card, etc., can be a helpful weapon in combating high health care costs. But the wrong plan will simply add to your overall tab.
Slow down, read the fine print, ask important questions, and you should be in good shape.