The Better Business Bureau is joining with state insurance commissioners to caution small businesses about "discount cards" that are marketed as if they are health insurance plans. The advertisements for discount plans appear everywhere – on telephone poles, in elevators, on unsolicited faxes and in spam e-mails. They all boast low monthly rates and provide a contact number for information. Unfortunately, if additional details are provided, they do not always tell the full story.
Judging by complaints received by BBBs, many small business owners mistakenly believe that by signing up for a discount medical plan, they have purchased affordable health insurance for their employees. In fact, discount plans vary significantly from actual insurance and provide different benefits. For instance:
- Discount plans can be sold by anyone at any cost with any benefits. They are not licensed insurance products.
- Health insurance typically covers most or the entire bill for approved services (after deductible, coinsurance and/or co-payments have been paid). By comparison, a discount plan provides only a discount off of a participating health care provider’s full fee; the patient is responsible for paying a majority of the fee at the time of the office visit.
- The protections and rights available to your employees under a health insurance plan may not be available to members of a discount plan.
- Providers in a typical discount plan’s "network" are not bound by contract to participate in the plan and may stop offering the discount at any time.
If you are considering enrolling your business in a discount health plan, review the plan carefully. Ask the sales person the following questions before making a decision, and obtain the answers in writing!
- Is this plan an insurance product in my state? Verify the answer by contacting your state insurance department (call 1.800.562.6900 for contact information).
- What is the annual cost of the plan? Don’t be swayed by exaggerated savings claims. "Up to 40%" does not mean a guaranteed 40% savings!
- What are the benefits of the discount? What health products and services are covered; which ones are not covered?
- Which local health care providers and facilities accept the discount card? If the sales person refuses to provide such a list, do not do business with them.
- Who do I call if I have a problem with the discount plan? Can I cancel my membership at any time?
Steer clear if you are pressured to "act now" because this is a "one-time offer." Purchasing health insurance for your employees should involve time and attention to details. Also, avoid salespeople or discount card companies that insist on debit card or bank account information. Remember, before making a purchasing decision, contact your BBB and your state insurance department to find out if there have been complaints against the company.