Olympia, Wash. — As health care costs rise and more people lose their employer-sponsored health insurance, some are turning to discount health plans. Unfortunately, many people who buy these plans think they’re buying real health insurance. A bill requested by Insurance Commissioner Mike Kreidler and signed today by Gov. Chris Gregoire establishes clear disclosure requirements for discount health plans and new consumer protections for the people who buy them.

Discount health plans are not insurance. They’re membership organizations that charge a fee for a list of providers who offer discounted health care services or products. They’ve been largely unregulated, up until now.

“More than 400 people have contacted my office with questions and complaints about discount health plans,” said Kreidler. “Either they received an advertisement via fax offering cheap health care for the entire family, or they were contacted by a plan in response to an Internet search. Some people who purchased these plans were misled into believing they had bought real health insurance.”

Today, Washington joins 33 other states - including Oregon, Idaho, and Utah - now regulating discount health plans. Sen. Jerome Delvin of Richland and Rep. Barbara Bailey of Oak Harbor sponsored the legislation.

Under the new law, 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.

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.

“Times are hard and people are desperate for affordable health insurance,” said Kreidler. “Until we have real health insurance reform, people will continue to look for cheap alternatives. The Discount Health Plan Act signed into law today helps educate consumers on their options and sets new standards on how the plans are sold.”

The discount health plan legislation

Fact sheet on discount health plan legislation