Consumers in the market for less expensive health insurance may be drawn to claims touting affordable health-care options, extensive discounts and no deductibles or co-pays.
Though the assurances from telemarketers or in advertisements may appear to offer attractive, low-cost health insurance, most instead are actually pitches for medical discount programs. These programs are not the same as health insurance, and they often charge a high price for little payoff.
In fact, Attorney General Dustin McDaniel won a lawsuit against one company that said it offered health insurance, but instead provided a medical discount card with few benefits. The Florida-based Consumer Health Benefits Association had enrolled hundreds of Arkansas consumers into a program that cost more than $100 a month. About 80 percent of those consumers cancelled their enrollment within six months.
McDaniel’s office recently distributed restitution checks to about 1,000 consumers who had fallen victim to the company, which overstated the benefits that were available to consumers. CHBA has since declared bankruptcy and is under investigation by federal authorities.
In an effort to prevent consumers from being victimized in similar scams, McDaniel has issued a consumer alert to provide Arkansans information about the potential drawbacks to health-care discount cards.
“Many medical discount programs claim that they can offer big savings on doctor’s visits, dental exams or prescriptions, but they fail to make good on those claims,” McDaniel said. “Consumers should be skeptical of these kinds of promises and should ask for as much information as possible before agreeing to enroll in a discount program.”
McDaniel noted that consumers who purchase health discount plans are protected under Arkansas law, and they have the right to a full refund within 30 days of purchase. Health discount programs are required by law to prominently display on their cards that the product is not health insurance.
McDaniel offered these additional suggestions to consumers who are considering enrollment in medical discount card programs:
• Remember that discount programs are not health insurance, even if they claim to be.
• Before paying to enroll, ask for a list of medical and dental providers that participate and ask about the specific discounts and services that are offered by those providers. If few or no nearby medical providers participate, consider whether enrollment is worth the investment.
• Consider other options if the company is not forthcoming with a provider list or other information.
• Be aware of the company’s refund policy.
• Make sure that the costs of the program are less than the anticipated savings. Substantial upfront enrollment fees plus other fees and costs may total more than the plan’s actual benefits.