A discount health program is not the same as health insurance and instead provides members with discounts for medical services. In 2020, 28 million people (8.6 percent) did not have health insurance. While health insurance provides coverage for a small or large portion of your medical needs, it is not always the most affordable or accessible option.
Discount Health Programs vs. Health Insurance
Health insurance and discount health programs are very different from one another. Discount health programs do not cover medical costs or services like health insurance. Instead, discount health programs provide reduced fees for products or services.
Pros and Cons of Discount Health Programs and Health Insurance
|Discount Health Programs|
What is a Discount Health Program?
A discount health program, also referred to as a discount health/medical card or discount health plan, is when a company provides discounted prices on medical services or products from participating doctors, hospitals, and other providers.
Discount health programs are relatively new and are growing in prevalence; however, a lack of regulatory interventions has led to many complaints ranging from exaggerated discounts to non-existent provider networks. It does not qualify as health insurance and differs from a dental or vision card, so it may not be enforced and regulated the same way insurance is.
A discount health program is not suitable enough to act as an individual’s only health coverage plan and is best used as a supplement with other coverage. If you have major medical health insurance, there is no need to buy a discount health card as the discounts are already built-in from negotiated rates.
However, the cards and plans can be a financial cushion for those that are uninsured as it provides access to discounted health care such as clinical care, specialist visits and treatment, hospital services, prescription medications, and sometimes dental and vision services.
Discount health plans are affordable, with monthly fees ranging from $8 to $148 per month. They occasionally have a one-time non-refundable enrollment fee as high as $200. Discounts range from 5 to 70 percent depending on the service and do not require a lot of paperwork or waiting for reimbursements. Instead, you just need to “show your card.”
The company offering the discount health plan will provide you with a list of specific providers who will be the only ones that can offer you discounts on their products or services. They do not pay any of your healthcare costs.
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Thousands of commercial companies offer discount health programs, and most do not have restrictions on who qualifies, nor do they require medical exams. While legitimate discount cards exist, many scammers will try and take your money. In a brief published by the Commonwealth Fund, they reported numerous issues consumers face when shopping for discount health cards. This includes:
- Misleading advertisements and/or misinformation
- Disconnected telephone numbers
- Discounts that are less than promised
- Providers listed in directories not participating
- High-pressure sales tactic
- High enrollment and monthly fees
- Inaccurate information on how to cancel
- Refund less than promised
- To avoid being scammed, do as much research as you can before signing up for a program
What is Health Insurance?
Health insurance is a contract that requires a patient’s health insurer to pay all or some of the patient’s health care costs in exchange for a premium, which is the amount a patient pays for the plan each month.
Health insurance is associated with lower death rates, improved health outcomes, improved productivity, and facilitates access to care. There is no federal penalty for not having health insurance.
Health insurance plans help cover medical costs, and their coverage can vary based on the type of insurance plan you are on. Insurance plans on the marketplace cover these 12 essential health benefits:
- Ambulatory patient services
- Emergency services
- Pregnancy, maternity, and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services
- Birth control coverage
- Breastfeeding coverage
Insurance plans are tailored to your demographics, budget, and needs. Different insurance plans exist for a wide array of individuals ranging from small business owners, veterans, freelance workers, and more.
Healthcare is not free in the U.S. and is notoriously complicated, fragmented, and expensive. There are four basic modes of payment for health insurance:
4 Basic Modes of Payment for Health Insurance
Basic Mode of Health Insurance Payment
payment is made directly from patient to provider
Individual private insurance
an insurance plan is purchased
(ex: marketplace plans)
Employment-based group private insurance
a health policy is selected and purchased by an employer and offered to eligible employees
Without health insurance, the price of medical services and products can range vastly, resulting in hidden fees that you may have to negotiate.
Only 90 percent of Americans are insured, with cost being a leading reason. According to the Kaiser Family Foundation, 73.7 percent of uninsured adults in 2019 said they were uninsured because the cost of coverage was too high. Many people do not have insurance through their job and are ineligible for Medicaid. Undocumented immigrants are ineligible for Medicaid or Marketplace coverage, and People of Color are disproportionately at risk of being uninsured.
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Discount Health Programs and Health Insurance Frequently Asked Questions (FAQs)
It can be challenging to start searching for a health insurance plan or a trustworthy discount health plan. Below, we answer some common questions that can help kickstart your search for the right insurance and discount health plans.
What should I look for when purchasing a discount health plan?
Factors to consider include credibility, medications offered, pharmacies offered, transparency about savings, and supplemental benefits.
To assure quality customer service and safe practices, check the provider’s standing with Better Business Bureau. The legitimacy of online pharmaceutical programs can be checked with verification by the National Association of Boards of Pharmacy.
How do I recognize a legitimate discount health card?
When looking for a discount health card, use good consumer sense by checking the company’s credentials, asking about the card’s cancellation policies, and keeping personal information private. If the deal seems too good to be true, it probably is. Legitimate programs are transparent about their costs, including administrative charges and monthly or annual membership fees.
Talk to your provider to make sure that they will honor the discount before purchasing. Add up all the costs and compare it with the total value of the discounts you will likely receive. Lastly, some states or municipalities, such as New York, offer free statewide prescription discounts that are income-based or available to everyone, so be sure to look up what discounts your state may provide you with.
How much should I spend on health insurance?
A good rule of thumb is to spend 10 percent of your annual income on health insurance. The average national cost of health insurance in 2021 for an individual is $7,739 per year and $22,221 for family coverage each year.
The average premium for families has increased 47 percent since 2011. Many factors should be considered when determining what plan is right for you, ranging from age, health status, income, and eligibility restrictions.
Discounted health plans are not the same as health insurance. Discounted health plans are affordable and offer reduced prices for medical services and products and should be used supplementary to other coverage. Before purchasing a discounted health plan, be cautious about researching to avoid being scammed.
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