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Health Insurance Glossary

Definitions for common health insurance terms

medical discount plan

DEFINITION: Medical discount plans are much less expensive than health insurance, but they do not provide any of the protections of a health insurance policy. Instead, they simply give members a discount on medical services.

The discounts are not guaranteed and can vary significantly depending on the provider and the treatment involved.  There is no cap on out-of-pocket costs with a discount plan, and they are not regulated by the ACA; regulation is left to the states instead.

Discount plans are not suitable to be a person’s only medical coverage, and they aren’t really necessary if you have major medical health insurance, as one of the benefits of health insurance is the built-in discount resulting from the network negotiated rates.

Having a discount plan (if it’s your only coverage) does not satisfy the Obamacare shared responsibility provision, which means you’ll still be assessed the shared responsibility payment unless you’re exempt from it.