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Be Careful When Purchasing a Discount Health
reprinted from the North Carolina Department of Insurance
With health care premiums on the rise, many North Carolinians are searching
for more affordable health insurance. It appears those factors have led to an
increase in the marketing of discount health plans across this state and
country. Discount health plans are neither insurance nor a substitute for
insurance. It is important to know the difference between health insurance and
discount health plans, and to be able to distinguish between legitimate and
fraudulent plans. Legitimate discount health plans offer discounts on services
from doctors, facilities and other health care providers, who accept and honor
the plans’ cards.
- Buyers Beware!
Because discount cards are not insurance, fewer consumer protections exist
for buyers. Currently, there are no state insurance laws that enable the
Department to regulate discount health care plans.
- Double-check the Company and Agent
Some insurance carriers offer discount cards at little or no cost as an
added value to their members. Certain associations, banks, employers and
others also provide discount cards. However, there is the potential for
confusion and fraud with respect to discount cards. Discount plans are not
licensed (even when sold by insurance agents) and can be sold by anyone.
Beware of salespeople and advertisements that use words like “co-payments”
or “premiums” to deceive consumers into thinking a discount plan is
insurance. Avoid sales personnel or companies of discount plans that insist
on debit or credit card information and who pressure you to make quick
decisions. Ask the sales person or company if the product is an insurance
plan or a discount plan. Contact your state Attorney General and the Better
Business Bureau to see if complaints have been made against the entity.
- Check the Benefits
While some deceptive discount health card issuers claim that their products
are insurance, discount cards generally do not process or pay medical
claims. Instead, enrollees are responsible for paying for services at the
time care is received. Some discount plans may exaggerate the savings
potential, and promise discounts that might not be available. Also, many of
these misleading discount plans do not cover all types of services or
conditions. Check with the company to make sure that there is a provider in
its network that meets your needs, and then confirm directly with the
provider that the plan is accepted. Even if the card produces discounts
as promised, you could still owe thousands of dollars if you are
hospitalized. Make sure that the discount plan has a toll-free phone number
for customer service, a reasonable complaint procedure and clear refund and
- Discount Card "Red Flags"
Here are some warning signs of possible fraudulent plans:
- Advertised through blast faxes, spam e-mails, Internet pop-ups or
signs posted on telephone poles.
- The company claims you can save a considerable amount on health
- The company or agent will not give you a list of providers until
after you purchase the discount card.
- The company uses high-pressure marketing and an extreme sense of
urgency, telling you that you “must act now” or “this is a one-time
- You are asked for debit or credit card information or a large
up-front fee. Legitimate discount cards will not mandate large
application fees or up-front costs.
- Legitimate discount card issuers will state on all their marketing
material “This is not insurance.”
- Legitimate discount card issuers will never suggest that you drop
your existing health insurance.
- Some discount card plans may advertise extravagant savings and
discounts, such as 50 to 80 percent savings. Be wary of such claims.
- If it seems too good to be true, it probably is!
- Get More Information
Information is your best defense. Consumers considering enrolling in a
discount plan should check with the Attorney General’s Office, Consumer
Protection Division (toll-free at (866) 867-6272) to see if any complaints
have been received about a specific plan.
Please note that this
is not health insurance and we do not make payments directly to medical
services providers. It is a discount program, and you are obligated to
pay for all health care services. You will receive discounts for medical
services at certain health care providers who have contracted with the
plan. This plan is administered by CAREINGTON International
Corporation, 7400 Gaylord Parkway, Frisco, TX 75034. The program and its
administrators have no liability for providing or guaranteeing service
or the quality of service rendered. Note to Utah residents: this
contract is not protected by the Utah Life and Health Guaranty
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