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.

The Price you Pay

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.

Fight Back

Ask the right questions before signing up…

• Insurance or discount? Know the difference between health insurance and a discount card. Ask whether the card is insurance that covers your treatment, or is a discount card that still requires you to pay all bills yourself.
• Slippery sales pitches. Be wary of slippery sales pitches. Here are several warning signals…
  • “Save up to 60 percent on healthcare.” The term “up to” is meaningless.
  • “Affordable health coverage.” Calling it coverage could deceive you into thinking you have real insurance.
  • “Guaranteed” benefits. Could sound like insurance, and not all cards can deliver on their promises anyway (see below)
  • “Long-Term care” discounts. Do not mistake this for true long-term health insurance.
• Fine print. Make sure the fine print agrees with the promises in the sales pitches.
• Your treatments? Does the card offer discounts on the medicine and treatments you need? Find out exactly what medical conditions, medicine, treatments and other services are included. Even if your medicines are discounted, check to see whether generic drugs are cheaper.
• Clearly listed? Are prices clearly listed? Do they offer a clear discount over what you now pay?
• Deliver the promises. Discount health cards may sell you little more than access to a large mailing list of medical providers that it purchased commercially. Providers don’t always know they’re even listed, and thus may not give you promised discounts. Provider lists even could have outdated and useless names. Don’t assume you’re getting access to a large provider network just because your discount card displays the network’s name and logo. If you plan to use a specific listed doctor, hospital, pharmacy or other provider, ask a few questions before you sign up. Such as.
  • Do the listed doctors, pharmacies, hospitals or other providers participate?
  • Do your current providers participate?
  • Will they honor the advertised discounts?
  • Can they help explain the card so you have advice from trained professionals?
• Hidden fees. Are large administrative fees hidden in the fine print? They can quickly eat up your discounts. Especially, watch for fees charged for each use of your discount card.
• Evasive pitches. be wary if the telemarketer or other sales person seems evasive, ill-informed or is reluctant to provide you detailed material about the card. Ask specific questions, and demand specific answers.
• Credit card fraud. Avoid giving your credit card and checking account numbers to strangers selling discount cards over the phone or the Internet. Fees for the card, for example, might be charged to your credit card even if you didn’t sign up.
• Refundable? Know whether your membership fee is refundable if you cancel, whether you can cancel at any time, and the procedures for canceling.

Contact Authorities

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.