Health Insurance Articles

Understanding the Difference Between Health Insurance and Discount Plans

2010-05-31

Most people understand the basics of health insurance. For a monthly premium, you are insured against all medical costs covered by your plan, with the exception of deductibles or co-pays. Many of us can go months or years without needing to use our health insurance. However, when we have a need for medical treatment, we are glad we have the coverage. If we did not have insurance, a few routine tests or a trip to the emergency room could be more than we can afford out-of-pocket. The difficulty with health insurance is that the premiums can be incredibly expensive, especially for a family, and the costs keep rising each year. As an alternative, some companies have begun to offer discount health insurance, or more accurately, discount health plans.

Discount health plans are not true insurance. Essentially, you are paying the company a monthly fee for access to a list of medical professionals who will provide services at a discounted price. You remain financially liable for your medical bills, no matter what the cost is. For routine medical matters, such health insurance discounts may make sense, particularly if you are in overall good health and do not need a lot of medical attention. Yet, despite the discounts, a serious medical issue or long stay in the hospital may result in bills so large you will have little ability to pay.

Many of the companies offering health insurance discounts are legitimate. However, a few have been investigated for fraudulent practices, such as charging your credit card even when you have decided not to purchase a plan, selling your personal information to other companies, and advertising discounts that are actually not available. As with any consumer product, a potential buyer of discount health insurance should research the company and make sure that the promised discounts are real and the company has not engaged in fraudulent business practices. A call to your local consumer protection agency or state attorney general's office to check on possible complaints against the company is advisable.

With the need to be so careful about health insurance discounts, is it ever a good idea to purchase a discount health plan? For some people, it may make sense, if the company is legitimate and reliable. Young people who generally have lower incomes and fewer medical needs may benefit from a discount plan as a bridge until they can afford traditional health insurance. Also, for working families who are priced out of the health insurance market, a discount plan may be better than nothing at all. Still, for any of these groups, a little time researching the company will prove invaluable.