Is it a health insurance plan or a discount plan? Know the difference

A health discount plan is different than a health insurance plan. Learn what the difference is before buying your health insurance.

The Affordable Care Act has mandated that each person have access to purchasing a health insurance plan. For many people who have never been covered by health insurance before, this may be the first time buying health insurance. The federal government has created a reputable website to help consumers do just that at www.healthcare.gov. The health insurance marketplace will help individuals find a qualified health insurance plan and will review personal information, including income and family size, to see if an individual or family is eligible for Medicaid, the Healthy Michigan Plan, the Marketplace or Medicare.

Consumers who are unaware of this resource may run into many companies trying to sell their products. Some of these companies are not selling a health insurance plan. Some companies are actually selling a health insurance discount plan. A health insurance discount plan is not a health insurance plan and it will not meet the requirement by the federal government to be covered by a qualified health insurance plan.

What is the difference between a health insurance plan and a health insurance discount plan? A health insurance discount plan provides discounts on medical procedures with certain doctors or medical related costs, such as prescriptions. It is similar to using a coupon at a store to reduce the price of a product. Some discount plans offer very little cost savings or their main objective is to scam and take someone’s money. Medical discount plans do not pay your health care costs.

According to the Federal Trade Commission, a health insurance plan offers a broad range of coverage for medical procedures and it pays a percentage of the medical bill either to the consumer or to the provider of the medical service.

Medical discount plans use language such “discounts up to 60 percent” but rarely deliver on these large discounts. Also, beware if you require extensive medical treatment as the consumer will likely be responsible for most, if not all, of the bill under a medical discount plan. When one compares the fees or monthly cost of a discount plan versus the actual discount savings, you may not be saving anything in the end.

If you consider signing up for a discount plan, check with all of your medical providers first to see if they actually accept the discount plan on their services. Also, be wary of plans that use “special deals” or pressure tactics to sign up quickly. Identity theft thieves may be behind the medical discount plan waiting for you to give them your personal information. Don’t give out your personal or financial information to anyone who calls you unexpectedly. To check a plan’s legitimacy, visit the websiteor call the office of the state’s insurance commissioner. You can also try the State Attorney General or the local Better Business Bureau. In Michigan, the State Insurance Commissioner can be found at www.michigan.gov/difs. A person cannot be too careful with their personal information.

For more information on purchasing health insurance or personal financial management, check out  Michigan State University Extension or visit www.mimoneyhealth.org.

Related Articles