Health Insurance vs. Medical Discount Plans: What’s the Difference?

Looking to save money on health insurance next year? Consumers may be solicited for plans that are pitched as health insurance, but are not actually insurance plans. They offer different services and coverage than a real health insurance plan would. And in some cases, these offers are scams that take consumers’ money and information, but provide no actual service at all. Consumers who buy these plans believing they are a replacement for their health insurance may be left responsible for unexpected medical bills or without any access to healthcare.

Some companies will make consumers think they sell health insurance, when the actual product they offer is a health care sharing organization, limited partnership health plan, limited indemnity plan, or medical discount plan. These plans are often marketed to consumers as “non-Marketplace plans,” “private health insurance plans,” “low-cost plans,” or an “alternative” to comprehensive health insurance. The sellers promise lower-cost premiums, but these plans are not health insurance and do not serve the same purpose.

Other companies sell plans that have not been approved or do not comply with legal requirements in Wisconsin. Legitimate health insurance products that provide limited benefits are required to include a disclaimer stating that the product is not major medical coverage and provides only limited benefits; these plans are designed to complement, not replace, comprehensive health insurance coverage. Consumers should take notice if they are pitched a product made to sound like health insurance but never named as such.

These plans may not be replacements for health insurance, but they are real products. Consumers must also avoid outright scammers who impersonate insurance companies or government agencies and offer deals on plans to steal consumers’ money and personal information.

Consumers should ask themselves these questions when choosing a plan:

· Does the price of the plan, plus any extra fees, cost more than the potential savings?

· Will the plan’s discounts be accepted by the specific doctors, pharmacies, dentists, and hospitals the consumer wants to receive care from?

· Is the company selling the plan being transparent about what the plan is, its benefits, and its limitations, or do they seem unwilling to provide specific details?

· Does the plan use deductibles, copays, and coinsurance, or fixed cash-per-day payments?

· Does the plan cover preexisting conditions and prescribed medications?

Consumers can protect themselves by taking detailed notes of any coverage promises and requesting the license number of any insurance agent offering to sell them any health insurance plan.

Contact OCI with questions or concerns regarding insurance coverage at 608-266-3585, or by email at ocicomplaints@wisconsin.gov. File a complaint about an insurance agent or company at oci.wi.gov/Complaints.