Discount Plans – Know What They Are Before You Buy

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With health care premiums rising in the double digits, more and more people are in search of affordable coverage. In recent years, discount plans – sometimes described as an "alternative" to health insurance – have become more popular. These plans typically require membership to the plan with monthly payments that entitle members to reduced rates from a network of participating providers. The most common discount plan services are medical, dental and vision care, prescription drugs and chiropractic care.

Discount plans are not insurance. They do not protect against financial ruin, nor do they assure access to expensive health care, such as hospital or emergency room care or surgery. Discount plans work more like savings coupons. The plans negotiate with various providers to provide services at a discounted rate to enrolled members; but members remain responsible for paying the entire balance of the charge, no matter how large it is.

Typical monthly payments for discount medical plans range from $30 to $70 (some as high as $150) per month per person. In addition, discount plans advertise they will accept all applicants, regardless of health status and existing medical conditions. The relatively low cost and "guaranteed issue" features of discount plans may be attractive to people with chronic conditions, such as diabetes, who often have trouble buying private health insurance at any price.

If you are thinking about buying a discount plan, keep in mind the following:

There may be information available on your state's Department of Insurance website on discount plans. As sales grow, states such as Kentucky, Colorado, Washington, Florida, and Georgia have issued consumer alerts to educate people about discount plans. For more detailed purchasing tips and other questions to ask when buying discount plans refer to these states' Department of Insurance websites.

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