It happens almost every day. Someone buys into a health plan, believing it’s traditional health insurance. They pay their monthly premiums, never suspecting that they haven’t bought medical insurance. They’ve actually bought something else entirely.
Discount plans
How exactly does this happen? Well, there are a number of companies offering legal, legitimate plans that let you have a discount on your medical benefits. What these plans do is, in essence, let you buy into a group purchasing scheme that gives you a little bit better pricing on medical services.
Unfortunately, these plans are often very limited. They’re limited in what they’ll cover, and they’re limited in where you can use them. They are similar to some of the prescription drug group plans that you’ve probably read about in recent years, only they are often not as widely accepted.
Certainly, they’re not as widely accepted as traditional medical insurance. In many cases, even hospitals aren’t a part of these plans. This leaves unsuspecting consumers in the lurch, sometimes owing thousands of dollars unexpectedly.
Limited Benefit Plans
It isn’t only discount plans that can throw customers off. Limited benefit plans are ones that give you basic coverage for routine or minor care. These types of plans only cover minor medical issues, and won’t cover catastrophic medical conditions or accidents.
In fact, in the state of New York, advertisements for one company offering this type of plan were ordered off the air nationwide. The company offering the limited benefit plan, American Medical Life Insurance, was also fined $700,000.
The real problem is that this plan was marketed as something it’s not. For example, it covers $1,000 each day for a hospital stay. Stays typically run around $5,000 a day.
Consumers find that the coverage is woefully inadequate, and they often don’t realize it until it’s already too late.
Caveat Emptor
While consumer advocates are asking for changes in how these kinds of plans can be marketed, in the meantime it’s a case of “buyer beware.” If you’re considering purchasing medical insurance, make sure you know what it is, and what exactly it covers, and who accepts it.
Photo via stevendepolo
