Medical discount plans: Big promises, few payoffs

Mary Lou Jay

Advertisements for medical discount plans usually promise to save you big bucks on your health care costs. Although there are some legitimate plans available, many of them are scams.

Fraudulent medical discounts plans target people who can’t afford regular health care insurance, who have lost their coverage or who have pre-existing medical conditions that make it impossible for them to get health insurance.

Medical discount plans don’t provide any payments toward services. They provide a list of physicians, pharmacies and other medical service providers that supposedly have promised discounts on certain services if you’re a member of the plan. That means you end up paying for all of your medical care yourself, even if it is at a discounted rate (and often it’s really not).

But medical discount plans often don’t live up to their promises. People discover that their physicians aren’t included in the plan, and it may be hard to find any local providers that participate in the discount program. If people do manage to locate physicians or pharmacies that will accept a discount card, the discount may be very low or good only on a limited number of services.

Scam alert!

The Federal Trade Commission (FTC) has compiled complaints from consumers who spent hundreds or even thousands of dollars to purchase medical discount plans, only to find the promised savings never materialized. During the past two years, the FTC has taken to court at least three companies offering fraudulent medical discount plans.

The FTC advises consumers to look for these warning signs that a medical discount plan is fraudulent:

  • Promises of specific discounts or savings. You may be told that you’ll get a 50 percent discount on all your medical expenses. But read the advertising and policy language carefully; it probably states that you can get savings up to a certain percentage. The actual savings usually are much lower.
  • Refusal to provide written information about the plan. Don’t pay any money until you’ve had a chance to carefully read the actual policy. Don’t settle for an advertising brochure. Insist that the company provide the entire list of the medical providers that are supposed to accept the discount, then call those providers to see whether they really do participate.
  • Pressure to buy the plan immediately. High-pressure sales tactics are a good indicator that the medical discount plan is fraudulent. Don’t let a salesperson talk you into buying a plan on the spot because “The offer is good only for today” or “You’re required to have this coverage because of the new health care legislation.”

The people who sell fraudulent medical discount plans may take more than your premium money. They also may steal your identity when you give them credit card or checking account numbers.

If you’re considering a medical discount plan, check out the company that’s selling it with your state’s insurance commissioner or the Better Business Bureau. Although it’s difficult to be without health insurance, it’s even harder to lose money because you were duped into buying a worthless plan.
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