Pros & Cons of Health Care Discount Plans

As health care and insurance costs rise in the United States, so does the popularity of health care discount plans. These plans allow consumers to purchase certain health care services at a lower price than they could on their own. These plans can often fill gaps left by traditional health insurance. There have been problems with many plans, however, due to a lack of adequate legal regulation. Problems may also arise when consumers misunderstand exactly what the plans do and do not provide.

Affordability

• Health care discount plans usually cost much less than traditional health insurance. Although discount plans vary, the National Conference of State Legislatures reports that as of March 2010, discount plans could cost as little as $8 per month. A single monthly fee typically covers an entire household, making the plans especially attractive to families with several children. Health care discount plans contract with health care providers and can often negotiate rates similar to those offered to HMOs and PPOs, saving plan members anywhere from five percent to 70 percent on health services.

Filling the Gaps

• When people are unable to get obtain health insurance or use many medical services not covered by their health insurance provider, health care discount programs can be a good way to fill in the gap. An individual who sees a chiropractor frequently, for example, may benefit from purchasing a health care discount plan that covers chiropractic visits if his regular health insurance does not. Discount plans may also pay for visits to a certain physician who is not part of an insured person's provider network. Medical examinations are not required by health care discount programs, so individuals with pre-existing conditions can participate in a health care discount plan even if they have been denied more traditional health care coverage.

Lack of Regulation

• Most states do not consider health care discount plans to be health insurance. This means that these discount plans are not bound by the same laws the govern health insurance. Consumers have had problems with health care discount plans making false and inflated claims. This problem has become common enough that, according to the National Conference of State Legislatures, 25 states had begun passing laws to regulate the activities of discount plans as of March 2010. Six more states have taken other types of action against the plans, such as issuing consumer alerts.

Paying the Bill

• Because health care discount plans are not technically insurance, plan members are expected to pay the full cost of medical services provided to them. Most providers expect payment at the time services are rendered unless other arrangements have bee made in advance. Some health care services are discounted only minimally under discount plans while other services are not discounted at all. Unlike traditional health insurance policies, health care discount programs do not pay a percentage of health care costs. Although some services may be offered at a discount with a health care discount plan, plan members may still ultimately pay more for many services than they would under a traditional insurance plan.