Discount Health Plans

Written by Sarah Provost
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It's a bad time to get sick in America. Due to rising costs of health care, employers all over the country are cutting back on medical benefits for employees. New positions are being filled by part-timers or employees labeled "consultants" so that health benefits don't have to be offered. For those who are unemployed, of course, the situation is even worse.

For these reasons, more and more people are turning to private health care insurance or discount memberships. Even those employees who do have basic medical insurance often don't have the extras such as prescription drug, vision or dental benefits. Many of them are also turning to supplemental private plans.

Three Basic Types of Medical Coverage

Medical coverage is offered in three basic options, indemnity insurance plans, managed care and membership discount plans. Each type of coverage has its assets and liabilities, so it's wise to do some research before deciding which type you want. Start with this summary of how each plan works.

If you choose indemnity or "fee-for-service" insurance you can continue to use your own doctor and hospital. If the medical service is covered, it doesn't matter who does it. These plans generally have both a deductible and a co-pay requirement based on a percentage of the fee, so your out-of-pocket expenses will probably be higher. Indemnity insurance doesn't usually cover preventive care such as flu shots or birth control. Many policies also exclude prescription drugs, vision care, dental care and/or outpatient mental health care.

Managed care, also known as an HMO, generally has no deductible. Co-payments are standardized flat fees and preventive care, drugs, and mental health treatment are usually covered. Out-of-pocket expenses, therefore, are usually lower than with indemnity plans. There is a major drawback, however. You can only consult a doctor or other provider who is under contract to your HMO. Furthermore, you can only receive medical services pre-authorized by the plan. If you use a doctor who is not in their system or want a procedure that the HMO won't approve, you'll have to pay the full bill.

Membership Discount Plans Offer a Third Option

Discount membership health plans are not actually defined as insurance because they assume no risk. These plans are administered by private companies. They have negotiated with health care providers such as doctors, hospitals and pharmacies to provide services at a discount, usually a percentage of their usual fees, in return for exclusive referrals. You are responsible for paying all fees after the discount has been applied.

There are several advantages to using a discount health care plan. For those who have no other insurance, it can definitely reduce their costs. It can also allow those who have insurance with a high deductible to make services stretch further. There are also few limitations: you don't have to have a low income or be a certain age to qualify, pre-existing conditions are usually accepted, and dental, vision, prescription and preventive benefits are available.

One of the major disadvantages is that you can only receive services from a contracted provider, much like an HMO. For pharmacy, vision, and even dental services, this is mitigated somewhat by the fact that many major nationwide chains are signatories. The second disadvantage is that if you don't use the service very much, you may be paying more in membership fees than you are saving in discounts. It may also be the case that the regular prices of a non-authorized provider are less than the discounted prices of an authorized provider. Finally, you must be certain you are dealing with a legitimate and competent provider. You can research this by contacting the American Medical Association or accessing their information online.


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