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Consumers Say Medical 'Benefit' Pitch Misleading

Discount plan is not insurance but confusion is common

By Mark Huffman
ConsumerAffairs.com

March 4, 2008

A Florida-based company called Consumer Health Benefits Association has triggered a number of complaints to ConsumerAffairs.com, as well as Florida regulators, for the way in which it markets its medical discount plan.

"Mr. Brown assured me that this was a major health insurance policy," James, of Chipley, Fla., told ConsumerAffairs.com. "When I received my package by mail and read everything, I learned it is not a major health insurance policy. I have called three times to cancel this policy and this company is still withdrawing premiums out of my account."

Gail, of Ft. Lauderdale, Fla., tells a similar story. She says she was contacted by a representative of Consumer Health Benefits and was told the company currently had "open enrollment for health insurance."

"I was told that I would only have to pay 20 percent of my medical expenses," she explained. "There's no deductible and no lifetime maximum. I would be using the normal networks of physicians that are on the back of the card. Suspicious, she called the Florida Department of Financial Services."

"This company is not registered to sell insurance in Florida," she said.

Not insurance

That may be because Consumer Health Benefits Association is not selling health insurance. If one goes to the company's Web site, the disclaimer is right there, in a prominent position on the home page, under the heading, DISCLOSURES:

"The plan is not a health insurance policy."

Well, then, what exactly is it? According to the company, "The plan provides discounts at certain health care providers of medical services." How much of a discount, and at which providers, is not stated. The Web site's list of providers is only available to consumers who submit personal information.

It's important for consumers to understand the difference between health insurance and a medical discount program. Good health insurance is usually expensive, because it covers a large portion of the policyholder's medical expenses.

For example, a typical plan could have a $500 deductible, meaning the policy holder pays the first $500 of each year's medical expenses. Once the deductible is met, the policy then pays 80 percent of medical costs the policy-holder incurs.

A medical discount plan is very different.

The companies selling these programs say they have negotiated discounts on medical services with certain medical providers. If your particular provider is not one of them, the program is of no value to you. Even if your provider is part of a medical discount program, the amount of the discount and the extent of the services you use will determine whether the monthly fee – usually more than $100 a month – costs you money or saves you money.

It's not clear from Consumer Health Benefits Association's Web site how useful its particular program would be, but the site in no way attempts to represent the program as health insurance. Yet, the consumers contacting ConsumerAffairs.com had the impression, initially at least, that the company was, in fact, offering a health insurance policy.

Telephone promises

How did they get that impression? Because, they say, that's what they were told over the phone.

Linda, of Spanish Fort, Alabama, says she was contacted by a Consumer Health Benefits Association representative after she submitted her contact information online, asking for information about health insurance.

"I received a call from a woman telling me that the company was looking for people that were uninsurable and needed insurance," Linda told us. "I informed her that I was not uninsurable, that I did not even take any medication and seemed to be in excellent health for my age. She kept saying that the company did this good deed, but it would not last and that I needed to jump on this."

Linda maintains that, even though the representative told her it was a "major medical" insurance policy, she was instructed to telephone the company to request information, and be recorded requesting the company send her information.

"She spent a few minutes coaching me on what to say on the tape, which I thought strange, especially since she told me that I had to say I knew it was not insurance. I even questioned her, since insurance was what I was looking for."

Could these three consumers – plus dozens more who have complained to ConsumerAffairs.com and Florida regulators -- be confused or mistaken about their conversations with these sales representatives? Anything's possible.

But the complaints have drawn the attention of the State of Florida. The Attorney General's office, which says it does not have immediate jurisdiction over this business activity, says it has received a number of complaints that have been referred to other state agencies.

One of the agencies, the Florida Department of Financial Services, says it has received 48 consumer complaints about Consumer Health Benefits Association from June 2003 through February 2008. Spokesman Brannon Jordan says the department has referred some of them to the state Office of Insurance Regulation, but could not say whether the company is the subject of an inquiry.

Consumer Health Benefits Association is managed and administered by VantageAmerica Solutions, Inc., of Glenview, Illinois. The company operates other medical discount programs nationwide.

A company official who refused to give his name denied the consumers' allegations and said we would be hearing from his attorney.

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