Health Discount Plans - A Crack Down
Hartfordbusiness.com reports that on October 1 a new law will go into effect in Connecticut that regulates health discount plans. Since April, the state department of insurance has received dozens of complaints about health discount plans, many times when people buy mistakenly thinking that they are buying health insurance.
Health discount plans provide discounts on medical bills (as much as 40% for some services while in some cases the discounts can be less than 25%) from certain health care providers, however they do not reimburse providers on behalf of consumers the way health insurance plans do.
The new law requires that each health discount plan disclose to the state its contracts with marketers. Plans have already been required to be licensed with the state in order to sell their plans in CT.
There has been controversy surrounding health discount plans in many states
Minnesota – 12 companies were ordered to cease operations in 2005, after using misleading advertising to trick customers into believing they were buying health insurance.
Montana — Prudent Choice was fined $150,000 and ordered to reimburse Montana residents who bought fraudulent health discount cards.
New York, South Dakota, Maryland and Florida have had similar problems with rogue marketers and their misleading sales tactics.
Over time many states will likely follow Connecticut’s lead and enact some type of legislation to protect health care consumers from aggressive sales tactics related to these plans.
If you are not precluded from purchasing a true health insurance plan due to preexisting health conditions, you should opt for a major medical health plan, as opposed to a health discount plan. There are many affordable health insurance options, that will provide protection as opposed to simply discounts.
