Health insurance is expensive. And if you are shopping for individual health insurance, you know it can be really expensive. Add to that pre-existing conditions, and the price can be outright ridiculous. And that’s why the following claims can be really enticing to those looking for health insurance:
- Affordable Health Care Plan
- Pre-existing conditions? No problem!
- No Deductible or Co-pays
- Thousands of providers in our PPO network
- Discounts up to 60%
So what’s the problem with these claims? The problem is they aren’t advertising health insurance. Instead, they are promoting what are called discount health plans. If you’ve spent anytime researching individual health insurance, you’ve probably come across these plans, sometimes called medical discount cards.
While discounts are always good, many are questioning just how effective these plans are. The concerns have grown to the point that the Federal Trade Commission has issued an alert about these plans (more about that alert in a moment). And if you search in Google for “discount health plans,” one of the first sites you’ll see is an article on InsuranceFraud.org warning about these plans. So we decided to take a closer look at these plans and offer some tips on how to evaluate whether a health discount plan is right for you
What is a discount health plan?
As noted above, discount health plans are NOT health insurance. Rather, they claim to offer vision, dental, prescriptions, physical therapy, or other medical care at a significant discount in exchange for a monthly fee. Most providers offer several different plans that generally fall into one of two categories. The first category is limited to a specific type of health service. For example, you can find discount plans that just cover dental care or prescriptions. The second category bundles together discounts across several types of health care.
By way of example, a company called Qualified Health offers a Basic Package and a Premium Package, both of which cover a broad range of services, including dental, vision, hearing, prescriptions, and in the Premium Package, hospital visits. The cost ranges from $19.95 a month for an individual on the Back Package to $88 a month for the Premium Package. In contrast, eHealthInsurance.com offers more narrowly tailored discount programs covering just dental and visions or dental, vision, and prescriptions. The cost is less, as you would expect, ranging from a low of about $7.50 to a high of $15 a month.
But the real question is how much will these plans actually save you. And that’s where things become a bit murky. On the Qualified Health website, they provide the following table as example of member savings:
As far as I know, there is no way to verify this information. More importantly, the question is not how much others have saved, but how much you will save if you buy into the plan. And that question depends on a number of factors very specific to each individual, including where you live, what doctors and other health care professionals you see, what treatments you’ll undertake, and so on.
As a result, there’s some homework you should do before buying a discount health plan.
What questions should you ask before buying a plan?
Here are a list of things to consider before buying a medical discount plan. Many of these tips come from the FTC alert mentioned above.
Discount Plan versus Health Insurance: First, do you need health insurance or a discount plan? While health insurance is too expensive for some, it’s worth shopping around first to compare prices. On eHealthInsurance.com, you can get health insurance quotes in seconds without providing your name, address, or other personally identifiable information. So it’s easy to compare discount plans with health insurance.
Check out the plan’s providers: Find out which health care providers in your area accept the discount plan you’re considering. If the plan’s website doesn’t provide this information, call or e-mail the company for more details. I did this as a test for two providers, and they both responded within 24 hours with information.
Contact your health care providers: I think this is the most important step. Contact the health care providers you use and confirm that the participate in the discount plan. If they do, find out exactly how much you’ll save. You may even ask if you can get the discount without the plan. Either way, you can’t make an informed decision unless you compare how much the plan costs with the actual savings you’ll receive.
Read the terms and conditions of the plan: As with any financial product, you need to read the fine print. The FTC suggests taking a hard look at the refund policy, to which I would add the cancellation policy, too. As an example, here is the cancellation policy from Qualified Health (as of 2/17/2010):
12. Members may cancel their Qualified Health program at any time upon written notice to the company and return of the ID cards. Cards should be mailed to: Qualified Health Accounting Department, P.O. Box 100820, Brooklyn NY 11210-0820. Program fees on enrollments cancelled within the first 30 days of enrollment date may be eligible for refund if the Qualified Health ID card is returned to the company within five business days prior to the anniversary date of member enrollment. Failure to activate cards does not constitute termination of the service agreement. The $20.00 enrollment fee is non-refundable. Any savings received under the program will reduce the refunded amount.
Investigate the health discount plan provider: Through Internet searches, contacting your state’s attorney general and the Better Business Bureau, you should be able to get information on the provider.
Discount Health Plan Providers
Here’s a list of companies that provide discount plans. You’ll need to do your own research, of course, as I have no experience with any of these companies:
- Health Plan Plus
- Pro Care Card
- American Health Benefits
- eHealthInsurance (offers quotes on both health insurance and discount plans)
So are discount health plans a scam? It seems that the better question to ask is how valuable they are, and that will vary from persons to person depending on how you’ll use the features each plan offers. If you’ve used a discount health plan before, please leave a comment below telling us whether you thought the plan was worth the money.
Discount medical programs differ from healthcare insurance in several important ways. Discount health care plans are available to anyone. Unlike traditional insurance, you are immediately qualified. There can be no denial for health conditions, you may begin using services immediately, and there is no paper work to process. Services are unlimited throughout your membership period for the same low membership fee. Getting started is easy, and your acceptance is guaranteed.
Your membership fee entitles you to unlimited services throughout the year with no maximums on services. You may receive services as often as needed and still receive the same pre-negotiated discounted rates. In comparison, traditional insurance requires costly deductibles, imposes limits on the number of times you can receive services and establishes annual maximums on services.
Simply enroll online anytime, and you are immediately accepted regardless of your age or pre-existing conditions. A membership card will arrive by mail in 7-10 business days. Once you have located a provider in your area using the Provider Services Directory, simply make an appointment and show your membership card when you arrive for your appointment. Then you just pay the pre-negotiated discounted rate at your time of service. You’ll love how you save money using these plans. Don’t get caught paying full price for your health care!
I am currently seeking Health insurance with Qualified health medical discount program. I want to know if its a scam.
I think the main problem with discount plans is what happens when you have a truly catastrophic medical expense. Even if the published savings that they talk about are true, they usually only list small expenses (like in the chart above, with the highest charge being $455). What happens if you get cancer? Or have a heart attack? Or have a premature baby who has to be in NICU for two months? Reputable health insurance policies have annual maximum out of pocket exposure, whereas discount plans do not. Your expenses will just keep piling up. And often the discounts aren’t so great on more expensive services anyway.
It’s important to remember that health insurance – like any insurance product – is there to protect your assets and prevent bankruptcy in the event of a medical claim that is unexpected and large. Even if a discount plan can save you a few dollars here and there on doctor visits, you’ll want to ask the company what would happen if you have a six-figure medical expense… and use that information to make your decision.
Thanks for a great article on an important subject.
This is a great dental discount plan. Available for use immediately, and I did. I got it one day for about $7 and a one time fee of $20. In any event, I live in Alpharetta, GA. I paid my monies and was easily guided to a list of providers. Not some crazy people in boxes, REAL dentists. Imagine that. Anyway, I saved about $250 dollars. I paid $126 to get a limited oral exam, the xray, and the filling. At that dentist, I recieved the best filling I’ve ever gotten. Check them out.
I agree. Do your research and check out the providers. I would give this company a try and they are not insurance. It’s worth getting for those who can’t get health insurance or qualify for state aid.
Good article 🙂
The best plan I have found is AmeriCard.
I am an insurance broker and I decided to introduce a discount health plan through my agents to my client companies in January 2010. We marketed the product for a year (one of the largest ones out there) and here are the problems we ran into:
1. This is virtually useless if you have a ppo, hmo, or good hsa/hra. The plans DO NOT work in conjunction with real health insurance as providers will not accept both at the same time. This also went for Rx’s.
2. Many providers listed in the “discount provider” section were not even aware they were listed and could not/would not provide discounts to our customers.
3. Customers, on average, kept the plans for 3-4 months before dropping them. We audited each cancellation and found the overwhelming reason was: not enough value for the cost.
4. Our small business clients (ones we have had for years) only had a 4% participation among their employees. They just couldn’t see the value in such a plan.
The conclusion I came to was this: people who can’t afford health insurance can’t even afford the discounted rates the providers in the discount network offer. They don’t go to the doctor or dentist unless it’s really serious and that’s when this discount plan is pretty useless since the costs to the patient are sky high on serious illnesses/injuries.
Also, this plan is appealing more to MLMer’s who are looking to become wealthy working from home or over the internet. If you strip away the commissions paid for recruiting others at $400+ there really is no sustainable business model here because demand just isn’t high enough for this product.
Ron, thanks for sharing your experiences with discount medical cards.
actually the larger the bill the more you can save. and yes you do have out of pocket expense, but you also have a rate that never increases and never denied coverage. if you can afford insurance premiums then great. but this is for those who cant. if you cant afford 800$ a month then this is a safety net to keep you from going bankrupt. i have used this and its great. its not insurance, but it is affordable to everyone, and will at least help take the burden off the threat of a mojor catastrophy. with the rising cost of health care this could be the way all health coverage goes in the next 10 years. remember, when health ins. started, it was considered a scam to pay this company money every month and then you might not even use it. and look how times have changed. now everyone has or wants coverage.
The benefits included in the Advantage Savings Programs are perfect for those who are without health insurance or under-insured, as well as, to fill the gaps left by a mini-med (limited benefit medical plan) or major medical type plan. This includes people with high deductible major medical plans and those with low and middle incomes who do not qualify for Medicaid, but cannot afford major medical insurance.
Care Entrée had a great program years ago
giving customers access to ppo pricing and bypassing
the need for the insurance company. However they went out
of business. There should be another program out there like
that to beat the ridiculous cost of health insurance premiums.
All those premiums/deductibles/ 20% co pays go the insurance
companies profits and the customer still loses in the long run.
I say cut out the middle man and let us deal directly with the hospital
and pay the ppo allowable price not the marked up healthcare cost
exaggerated sometimes over 100% more than their margin to make a profit.
I go to a corporate dentistry who bought out the local dentist when he retired. They sell a
discount dental card and then give the discount. I guess it works for them since they raised
their prices two to three times what the original dentist charged then give a few dollars off.
Seems like a scam to me.