For Immediate Release - January 26, 2010

Attorney General Martha Coakley's Office Announces Regulations for Discount Health Plans and Discount Health Plan Organizations

BOSTON - Today, Attorney General Martha Coakley's Office announced that regulations regarding discount health plan regulations have been finalized and became effective on January 22, 2010. The regulations were designed to protect Massachusetts residents from the unscrupulous marketing of plans that claim to offer discounts on health products or services. Health discount plans are not insurance products and are therefore not regulated by the Division of Insurance.

"These regulations require companies who issue health discount plans to inform their customers how the products work and to make clear that discount plans are not a substitute for health insurance," Attorney General Coakley said. "Paying for health care can be very difficult and some companies have sought to exploit consumer anxiety and confusion for their own gain. We will not tolerate deceptive conduct and we will continue to vigorously pursue actions to halt such conduct in Massachusetts."

The Attorney General's Office issued these regulations as part of a multi-pronged approach to addressing the increasing problem of deceptive marketing of medical discount plans, including publishing consumer education advisories and pursued law enforcement actions in order to safeguard consumers from these scams. Health discount plans may provide consumers with discounts for medical, dental, vision and other health care products or services from certain providers in exchange for some form of fee.

The regulations require organizations marketing health discount plans in Massachusetts to communicate clearly with potential customers about how these plans work. Discount plans must now disclose that they are not insurance and that the consumer is responsible for paying for any services or products they receive. The regulations also require health discount plan organizations to have written contracts with all participating health care providers and to provide consumers access to an up-to-date list of all participating providers.

The Attorney General proposed these consumer-protection regulations last fall and held a public hearing on the regulations on October 13, 2009. The final regulations reflect some modifications based on comments made by consumer advocates and industry representatives. A copy of the regulations, entitled Regulations on Discount Health Plan and Discount Health Plan Organizations (940 CMR 26.00), can be found at

Attorney General Coakley created the Office's Health Care Division upon taking office in 2007 to place a heightened focus on promoting the interests of consumers as Massachusetts undertook its landmark health reform effort. Since its implementation, the division has taken a variety of actions aimed at protecting consumers against unfair and deceptive trade practices by health insurers and discount health plans.

Earlier this month, Attorney General Coakley's office filed an agreement in Superior Court with four companies, barring them from marketing, selling or promoting certain discount health plans to any Massachusetts resident while a lawsuit against those companies is pending. The complaint was filed in October 2009 against Consumer Health Benefit Association, National Benefits Consultants, LLC, Guarantee Trust Life Insurance Company and Vantage America Solutions, Inc., alleging those entities sold a discount health plan unfairly and deceptively in multiple ways, including falsely representing it as satisfying Massachusetts law requiring individuals to have health insurance. The injunction filed in January bars such conduct until the case is resolved.

Consumers looking for tips on how to avoid scams and make smart health plan choices can go to the Attorney General's website and review a joint consumer advisory issued by the Attorney General's Office and the Division of Insurance. The advisory can be viewed here: pdf format of health_advisory.pdf

The issuance of this regulation was handled by Assistant Attorney General Lois Johnson, Health Policy Analyst Kim Henry, and Division Chief Tom O'Brien, all of Attorney General Coakley's Health Care Division.