Individuals have the option of choosing health insurance or discount health plans to help pay medical costs.
Individuals and families purchase health insurance to help pay for medical services when they become injured or sick. Discount health plans lower the costs incurred by its members seeking health care services as well. However, that is basically the only similarity between these two plans, as the latter isn't even considered insurance.
Health Insurance Plans
There are two main types of insurance plans sold in the U.S.: indemnity health and managed care. Indemnity health policies reimburse their members after receiving medical services (fee-for-service). Managed health care plans control health care costs by negotiating prices with networks of doctors and encouraging, sometimes requiring, their members to seek their services. A Health Maintenance Organization, HMO, Preferred Provider Organization, PPO, or Point of Service, POS, are three types of managed health plans available to the public.
Discount Health Insurance Plans
Discount health insurance plans are alternatives for individuals to pay for health care services. These plans provide members with discounts for health care. Doctors, in exchange for business, participate in these plans and perform medical services for members at discounted rates. Individuals purchase discount health plans to receive discounts on prescription drug purchases and also vision and dental care services.
Considerations
Discount health plans are not considered health insurance. Individuals and families opt for discount health plans because they cannot afford or qualify for regular health insurance policies. Insurers require applicants for individual health plans to take medical examinations as part of the process to determine the status of their health. This is not a requirement from discount health plan companies. While applicants with pre-existing conditions can be denied health insurance, this generally wouldn't prevent individuals from getting discount health plans.
Differences
Individuals have to pay premiums and receive benefit to cover some or all of their medical costs. Those who have discount health plans pay membership fees, and the companies don't provide complete coverage. Regular health policies are sold by insurance companies, while most discount health plans are offered by marketing businesses with some insurers selling prescription drug plans. Also, health insurance plans are regulated by government agencies in each state, providing consumer protections if insurers are violating the laws. These protections are not extended to people who have discount health plans.
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