I received a call recently from Jean DeMarco about the medical discount plan she purchased in April from an Arizona-based company called Easy Life Health Care.
The plan caught her attention because her health insurance, through her husband's employer, recently changed to a high-deductible plan, meaning it required up-front out-of-pocket costs that left DeMarco feeling like "I can't go to the doctor."
Medical discount plans are not insurance plans. A health insurer agrees, for a premium, to assume responsibility for a portion of your medical expenses. Medical discount plans, on the other hand, grant access to a network of providers who have agreed to give participants a discount on their services, but the plan itself assumes no liability.
In their marketing, however, these plans use the buzzwords of insurance plans, such as emphasizing that there are no co-pays or deductibles to worry about, and pre-existing conditions are not a problem-- and that can cause confusion. Among other things, regulation tries to ensure that health insurers comply with the terms of their policies and have sufficient reserves to cover claims when policy owners are in need of help.
"These plans may seem like health insurance sometimes, but they're not regulated," says Jim Ware of the State Corporation Commission Department of Insurance. In other words, consumers will receive no more or no less protection than in any other commercial transaction, although with health care the stakes could not be higher.
"Some medical discount plans claim to provide big discounts from hundreds of providers for a wide range of services, from doctor visits and dental exams to hospital stays and prescription drugs," the U.S. Federal Trade Commission warns. "But many plans fail to make good on those claims."
That's what allegedly happened to DeMarco. She signed up for the Easy Life plan at a cost of $80 per month, charged to her credit card. The telemarketer who sold the plan promised DeMarco she could use any medical professional she chose at a discount, even her current physician-- just, ahem, what the doctor ordered for DeMarco, or so she thought, until she met her high deductible.
When DeMarco finally tried to use the service, however, she found out, first, discounts are offered only by certain in-network doctors, and second, there is not an in-network doctor within 100 miles of Charlottesville.
DeMarco immediately tried to cancel the plan, but this was easier said than done. The company's customer service department did not answer its phone. After a second month's payment was charged to her credit card, DeMarco canceled her credit card.
DeMarco then noticed in Easy Life's literature the mention of another company, Careington International Corp. It turns out that Easy Life is a marketer for Careington's plans, so she called them and they put her in touch with Easy Life. Still, the company refused to do anything.
That's when DeMarco called me.
The next day, before I had even a chance to do anything, DeMarco called again to tell me she had heard from Kris Virgin, Careington's Director of Licensing and Regulation, who called Easy Life's marketing representations "unacceptable," and said Easy Life would be refunding all DeMarco's money. So far, she has received one-half, or $80.
It appears to be working out for DeMarco thanks to her own persistence, and perhaps a little luck. And Careington deserves credit for standing behind its product.
But more seriously, when it comes to health care, a word to the wise. Before shelling out any money, be sure what you're getting and with whom you're dealing. Once you're actually sick, learning that you don't have what you thought you had will be no laughing matter.
If you're uncertain, get in touch with the Virginia Department of Insurance. You can find contact information at scc.virginia.gov/division/boi/webpagesboiconsumer.htm-contactus or call toll free 1-800-552-7945.
