As health care costs rise and more people lose their employer-sponsored health insurance, some are turning to discount health plans. A new Washington state law taking effect July 26, 2009, establishes clear disclosure requirements for discount health plans and new consumer protections for the people who buy them.

What are discount health plans?

They’re membership organizations that charge a fee for a list of health care providers who offer discounted health care services or products. Discount health plans may be useful for some people looking to save money, but they are not insurance.

Requirements under the new law (effective July 26, 2009)

Discount health plans must

Obtain a license from the Office of the Insurance Commissioner and file an annual statement, including the number of current members and how it will handle complaints.
Have written provider agreements that include the services and products that are discounted and the amount of the discounts.
NOT restrict access to providers.
Refund all periodic charges to a member who cancels a discount plan within 30 days of enrolling.
Charge no more than a $30 one-time initial processing fee.
If asked, provide a potential customer with written materials describing the terms and conditions of the plan.

Their marketing materials must

Prominently display the plan name.
State that it is a discount health plan and not insurance.
Clearly state the benefits the plan provides.
Contain a toll-free phone number and Web site with an updated list of providers.
NOT use the term “insurance,” or terms that lead a consumer to believe the product is insurance.
NOT mislead buyers about the discount or range of discounts.

Discount health plans may be a good option for cutting your medical costs, but remember, they’re not insurance.

What to consider before you buy a discount plan

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