INSURANCE RUMINATIONS

MEDICAL DISCOUNT PLANS:  THEY MIGHT BE HELPFUL,
BUT THEY ARE NOT INSURANCE

            When people, including the hard to insure, try to reduce their medical expenses, some may look to a comparatively new kind of product:  a medical discount plan.

            What is vital to understand, is that regardless of how it is represented by the seller, such a plan is not insurance.  You remain personally responsible for the payment of the medical charges that you incur. 

            Enrollment in and payment of the monthly charge for a medical discount plan entitles you, at most, to access to providers of medical and hospital services and the right to receive them services at a discount from standard rates.  Sometimes the programs include discounts on dental services, eye care services, prescriptions and other types of healthcare, but the fundamentals remain the same:  you are financially responsible for the payment of the charges. 

            Although discount plans do serve a useful purpose, in the fervor to market them, sellers may misrepresent their advantages.  While the “fine print” may state that the plan is not insurance, the relatively low cost of the plan may lure consumers to enroll, and the seller may conveniently skip over the fact that no risk of loss is transferred as it is with true insurance.  In the worst case, a consumer may cancel their real (although sometimes costly) insurance, to take advantage of the lower monthly price of a discount plan.  Then, an intervening medical need--surgery for example--could leave the consumer on the hook for thousands of dollars of health care expenses which may have otherwise been paid by an insurer.

            Another potential danger of medical discount plans is that providers (physicians, hospitals, and others) may cease participating in the plan.  Therefore, your trusted family physician, or a specialist to whom you are referred, may one month be a participant in the plan, and the next month, be gone.  Further, the plan may boast discounts larger than those actually given.

            How can you protect yourself?  First, you have to make very sure that enrolling in a discount plan is beneficial for you.  If you have “real” insurance, even if expensive, the true benefits of a discount plan may be illusory; saving some money on premiums may not be worth the risk of personal liability for potentially enormous medical bills.

           Next, you need to make sure that your healthcare providers are actually participants in the plan, and that the type of treatment that you are receiving is included within the scope of the discount.  Providers do not always know that they are listed as plan participants (they sometimes get conned too!), and as stated, they may choose to cease their involvement.  The fact that a network’s logo is displayed on the membership card does not, in itself, mean much.

           Third, you should confirm that the discounts actually given are at least equal to those represented.  Although it is not often possible to go “price-shopping” for medical care, especially in an emergency, it is always important to gather as much advanced information as to what you are getting into.

           Increasingly, State insurance regulators (or other government bodies) are licensing and regulating medical discount plans.  Before enrolling in one, you should always contact the governing body in your State to make sure that the plan is licensed and operating according to law. 

Copyright 2010, Luke S. Brown (Reprinted with permission)