A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

AG Regulates Health Discount Plans

AG Regulates Health Discount Plans

February 1, 2010

This past Friday the Massachusetts Attorney General’s Office announced new regulations designed to protect Massachusetts consumers by preventing the deceptive marketing of discount health plans.

For many, these plans are pure scams - deceptively sold as insurance but providing no real insurance benefits.

A discount health plan requires you to pay a monthly or annual fee and in return you receive a discount on a limited number of medical services and providers. However, doctors may charge patients enrolled in discount health plans a higher fee than the doctor actually receives as reimbursement from an insurance company for the same services. Thus, the discount may not save the patient as much as it appears.

Discount health plans are not the same as health insurance and purchasing one instead of health insurance may subject people to a tax penalty under the individual mandate of up to $1,068 per year.

In some cases, a discount health plan may provide a good supplemental benefit for individuals who have health insurance with high-deductibles. These plans may also provide supplementary dental, vision or prescription benefits.

The new regulations are designed to protect consumers from deceptive advertising practices and enable people to make informed decisions and navigate your way through the complex health care system. Specifically, the regulations require discount plans to disclose that they are not insurance coverage and that enrollees are responsible for paying out of pocket for all services or products they receive. Discount health plan organizations are also now required to maintain and provide consumers with up-to-date written contracts with all participating health care providers.

You should consider all state-subsidized health insurance options before purchasing a discount health plan. For more information, please call the Health Care for All Helpline at 1-800-272-4232, and check out the Attorney General’s helpful consumer advisory (pdf).
-Shoshana Speiser