QUESTION

What is a discount medical plan? What are the risks and benefits of buying one?

Individuals with no coverage | Comparing Plans: Benefits and Costs |
ANSWER

A discount medical plan is not health insurance, and will not provide the kind of financial protection that you can obtain through a health plan on the health insurance Marketplace. These plans do not qualify as minimum essential coverage under the Affordable Care Act, meaning you may need to wait until open enrollment if you want to cancel your discount medical plan and enroll in comprehensive coverage. Note that some of these discount plans may use marketing materials that suggest they provide traditional insurance.

Generally, consumers who sign up for a discount plan must pay an upfront enrollment fee plus a monthly subscription. In exchange, the plan offers discounts on medical services from doctors, hospitals and dentists. However, a number of state insurance regulators have had to shut down these plans because of fraudulent activity, and often the discounts they provide are no better than what you could negotiate on your own. Consumers who suspect that a discount plan is falsely advertising itself as health insurance should report the company to their state department ofinsurance. (26 U.S.C. § 5000A.)

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