Finance Globe

U.S. financial and economic topics from several finance writers.
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FTC: Sending Checks to Victims of Medical Discount Plan Scheme

Victims who were tricked by an alleged health care scam will be receiving refund checks in the mail thanks to efforts by the Federal Trade Commission.

The FTC is sending out $1.1 million worth of checks to over 50,000 consumers, and recipients of the checks have 60 days to cash them. Victims of the purported scam fell were tricked into believing they were buying government-endorsed health insurance, when in fact they were paying for a worthless medical discount plan. The telemarketers falsely claimed that their program was widely accepted in the consumers’ local area. One of the defendant’s several companies also had radio and television ads promising 100% satisfaction and a money-back guarantee and failed to live up to its promise.

The FTC advises consumers to be sure of what they are signing up for when purchasing a health care plan.

True health insurance covers a wide range of medical expenses, and its cost is based on your age, gender, and health, as well as the amount of coverage you want. Health insurance will pay for a portion of your medical expenses after you’ve met your end of the deal in the form of co-pays and the deductible. Unfortunately, health insurance is a major expense for the typical person, and you are very unlikely to receive telemarketing calls offering special deals or limited-time offers for genuine health insurance.

Medical discount plans, on the other hand, do what their name suggests - they offer a discount in a sort of “buyer’s club” for certain types of health care needs such as prescriptions or vision care. The discount available to you will depend on the provider and the type of services you recieved and you may be required to pay your full balance at the time of service to receive your discount. A medical discount plan may seem like a low-cost alternative to health insurance, but the savings on doctor visits may be negligible by the time you pay the plan’s monthly fee, and you are still on your own for major medical expenses.

While a legitimate medical discount plan can save you money a health care needs, the industry is littered with not-so-honest companies who exaggerate their savings, offer lists of participating health care providers that are either outdated or even an outright lie, or fail to inform consumers of hidden fees. The worst in this group are the sham companies who don’t offer any discounts or benefits at all and their only existence is to con people out of the membership fee. And since a medical discount plan is not insurance, consumers are not protected by state insurance laws.

Get answers before committing to a program:
  • Know whether you are buying insurance or a medical discount plan
  • Don’t be fooled by phrases that are worded to sound like health insurance like “health coverage,” “long term care discounts,” or “guaranteed benefits.”
  • “Save up to 60 percent” doesn’t mean you will save 60 percent.
  • Read the fine print before agreeing to anything
  • Make sure the program offers discounts on services you will actually use or that the prescription discounts give you a better deal than simply buying generics
  • Are the prices and discounts clearly listed?
  • Are there hidden administrative fees? Are there fees for each time you use your discount card?
  • Be wary if the sales person seems evasive, ill-informed, or reluctant to provide you with detailed material about the card. Demand answers to your questions.
  • Avoid giving out your credit card or bank information over the phone or internet to telemarketers. Insist that you are given a chance to read over the literature before you commit to buy.
  • Know whether your membership fee is refundable if you cancel, whether you can cancel at any time, and the procedures for canceling your service.
  • And finally, don’t hesitate to contact yourstate insurance department and Better Business Bureau if you suspect a scam. Your insurance department may not regulate the cards, but can help refer suspected fraud to the right authorities.

Federal Trade Commission
Coalition Against Insurance Fraud
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Sunday, 16 June 2024

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