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Many companies are selling so-called discount health cards to consumers seeking affordable healthcare. Usually for a monthly fee, the cards claim to save subscribers money by offering discounts on physician visits, hospital stays, prescription drugs, dental work, eye care and other treatment. You need to be aware of the difference between health insurance and discount health or medical “cards.”
Some discount health care cards may provide valuable, money-saving benefits for people without health insurance. But unscrupulous marketers offer discount health cards claiming they are health insurance when, in fact, they are not insurance. You still must pay the medical bills yourself. To the extent they provide any benefits at all, discount medical health cards simply offer lower prices on services that accept these discounts. Many cards thus can cost you far more money than they’re worth.
In these tough economic times, the number of deceptive or fraudulent medical discount cards is growing at an alarming rate. To lure unwary customers, ads for bogus cards can make it seem they’re selling real health insurance. They often make grossly inflated promises about savings and benefits and incorrectly represent that they are accepted by many doctors and other health care providers. Though legislation is pending, discount medical health cards are not currently regulated by the Department of Insurance, which means there are fewer consumer protections. While the DOI does investigate consumer complaints regarding the unfair marketing of these cards and their mismarketing has been prosecuted, the absence of licensing and regulatory authority means you have to be extra vigilant.
You could lose your health coverage. You could give up your current health coverage, mistakenly believing you found a better insurance deal. In fact, you’ll have no health coverage and will be responsible to pay medical bills yourself if you’re fooled into believing you have real insurance. Imagine arriving sick or injured at the hospital or doctor’s office, then presenting your discount card only to find you have no health insurance.
The promised discounts may not exist, or may be exaggerated. Hidden administrative fees and other hidden costs can eat up your discounts. In the end, you may have to pay more money than you thought.
Your health care may be compromised. The medical providers and treatments the cards promise you may not exist.
Your money, identity and financial information could be stolen. At least one company obtained the credit card and checking account numbers of consumers when it tried to sell them discount cards over the phone, and then billed their credit cards unauthorized charges even when consumers declined the cards, the U.S. Federal Trade Commission alleges.
Ask the right questions before signing up…
Contact the Delaware Department of Insurance Fraud Hotline at 1-800-632-5154 (in-state only) or (302) 674-7300 outside Delaware if you suspect a scam. You may also wish to contact the Delaware Better Business Bureau at (302) 221-5255. Further information regarding medical discount health card scams can be obtained from the Coalition Against Insurance Fraud, whom the DOI would like to acknowledge for their assistance in creating these materials.
The Federal Trade Commission has created a mini-site about fraudulent medical discount plans that claim to offer consumers low-cost health insurance or discounts on medical services. The site includes links to free flyers and bookmarks about how to avoid these scams, videos on the recent “Operation Healthcare Hustle” law enforcement sweep which targeted these types of companies, a PowerPoint presentation you can use to educate consumers about how to spot a medical discount plan scam, and more information.