If you simply shop blindly
around the internet for health insurance, you will receive multiple
contacts from health care programs, many of which are NOT insurance.
They are not illegal, nor are all of them scams—although some
are. They are discount programs which work in a variety of ways.
In some cases, if you have insurance with a high deductible, a discount
program may help you meet that deductible. But you need to be able
to recognize them. The following descriptions will give you a general
idea of how these programs work.
Health Care Plans. A discount plan is exactly what
it sounds like. You pay a monthly premium. In return, the administrators
of the program negotiate with your doctor or hospital to accept
a reduced fee. You have to pay the reduced fee yourself. The
company does not reimburse you, nor does it pay any portion
of your medical bill. They do nothing but negotiate to get you
a lower fee. Some of these programs claim to reduce your medical
costs by up to 80%, but 20% to 30% is more common. Before paying
for a discount policy, you need to contact your area hospital
and your regular doctor on your own. Take the time to visit
your doctor's office with literature from the company that you
can show to the person who handles the billing. If they have
never heard of the company, steer clear. Callers that promise
enormous discounts—and demand a credit card or some payment
over the phone in order to "guarantee" the lowest rate—are
sources of the biggest scams. Nevertheless, legitimate discount
programs do exist.
You may be familiar with these programs as "personal accident"
coverage, or something that will pay you a certain amount per
day in the hospital or emergency room if you have a covered
accident. You pay the hospital or facility whatever is charged.
Then you submit a report to the company, and they send a check
directly to you. Years ago, you had one very low premium for
the entire year and could get it for yourself or for your entire
family. A big selling point for those who had children was that
if a child fell and cut his knee and required a visit to the
emergency room, you could turn in a claim and collect even if
you had insurance.
Direct reimbursement programs still operate much as they did in the past, but many companies have expanded coverage to include illness as well as accidents. Some also reimburse you for laboratory work or x-rays. You receive a schedule telling you how much you can collect for any covered event. These programs are generally more reliable than a mere discount program, especially when run by well established companies.
Brotherhood and Fraternity programs. These, if financially solvent, are some of the best alternatives to regular health insurance. They are run by organizations whose members contribute to the "pot," which is doled out when a member has a need. At one time you had to be a member of the fraternity, but some are now accepting non-members. Usually, they do not pay for routine doctor's visits or for medicine, but they pay for catastrophic illness or for hospitalization. It is not considered insurance, but you cannot join the organization if you do have other insurance.