Blinded By a Bargain: The Benefits & Risks of Discount Health Cards

“Healthcare for your whole family, just $84.99/month!”

Now that would be a bargain. But would it be health insurance?

Rising insurance costs have many consumers scrambling for the cheapest coverage they can find. Blinded by attractive prices, some are mistaking vague sales pitches like these for the health insurance they need.

In reality, the promised “healthcare” is discount health cards – not health insurance. And when consumers go to the doctor’s, they find out there’s a big difference.

Discount health cards don’t pay for your health care. Instead, they are designed to offer consumers varying discounts on everything from doctor’s visits to dental work from participating providers, typically for a monthly fee. Unlike most insurance plans, the discount card holder pays for their discounted services up front and isn’t reimbursed for out-of-pocket expenses.

Be smart about discount health cards

Discount cards prove to be a valuable investment for many consumers. When the budget’s too tight for full health insurance coverage, families can use these cards to get their health care at a reduced rate.

Unfortunately, because discount health cards aren’t insurance, they’re not regulated by the insurance departments of most states. So when a dishonest company appears on the scene consumers have little protection against their bad business practices.

In the worst scenarios, discount health card scammers go far enough to call their plans insurance. Consumers in turn drop their legitimate health coverage – only to find what they have is a discount health card that marks down but doesn’t pay for their health care expenses. They’re not only stuck with an unexpected bill, now they have to re-purchase insurance, risking higher premiums or exclusion for any preexisting conditions.

Some more nasty surprises dealt by deceptive discount health plans:

• Number and specific providers who accept the discount cards are misrepresented. Always call up listed providers and find out from them directly if they accept the card before you buy one.
• Discounts are widely exaggerated. Actual discounts are less than promised or are not even available.
• Many medical services are not covered. Consumers with specific medical needs might discover too late that their necessary care won’t be discounted.
• Extra fees. Buried in the fine print, extra fees can quickly wipe out any savings the card could offer you.

How to spot a bad deal among the good ones

Discount health cards can be extremely valuable to people who can’t afford health insurance. If you do want to purchase a discount health card, make sure you get a good one. Look out for these 9 warning signs:

1. How did you hear about it? Legitimate companies aren’t likely to advertise their plans through spam emails, flyers stuck to telephone poles, blast faxes and online pop-up ads.
2. Disproportionate savings. You are promised huge savings that are completely out of whack with what similar companies are able to offer.
3. Information hold outs. They won’t cough up their list of participating providers until after you pay them.
4. Buy. Now! Look out for exclusive, limited time only offers. People who can be pressured into acting fast might not have time to fully realize what they’re buying. Reputable companies won’t use these tactics to win your business.
5. They are dying for your credit card number. A good company won’t pressure you to provide your payment information the first time they get you on the phone. Look for a company that gives you plenty of time to think over their offer and lets you provide your credit card number when you’re good and ready.
6. How big is that “application fee”? Good companies won’t require you to pay extravagant application fees.
7. Read the not-so fine print. The legit companies don’t want you to be misled about their services. They’ll plaster all their brochures and ads with words like: “Discount Health Card is NOT insurance!”
8. Pressure to drop your existing coverage. Beware the companies that tell you to pick up their plan and dump your current coverage – you won’t hear that line from the good ones.
9. Do the discounts weigh out the costs? Before you buy, carefully calculate whether the discounts you’ll be getting make the costs worth it.

Insurance shoppers: If you are looking for health insurance, make sure you don’t confuse a discount card for full coverage. A discount card gives you deals on specific services, but does not reimburse you for your out-of-pocket expenses. Always ask an agent or company directly: “Are you selling a discount card, or a health insurance plan?”