Discount Cards and the American People

What began as a seemingly well-intentioned move on the part of the Bush Administration has quickly become a national controversy. In hindsight, many will argue that it was bound to happen - a government-sponsored prescription discount plan could only fan the flame of the already smoldering debate over who really profits from discount cards. The small but forceful opposition claims that no one but the group selling or distributing the cards really benefits from them. In fact, they protest, discount cards are great pretenders - intentionally, if not falsely, presented as insurance. With all the smoke and mirrors, it's difficult to ascertain fact from fiction, but, as with most great arguments, the truth probably lies somewhere in the middle.

A pioneer and innovator in the discount health benefits industry, New Benefits has always filled a necessary gap for millions of uninsured, underinsured and insured Americans. We do not attempt to serve as a replacement for insurance; rather, we have designed our discount benefits to offset the ever-increasing cost of health care. Individuals and families without health insurance can receive significant savings on everyday health-related expenses, such as eyeglasses and prescription medications, which might otherwise be unaffordable. Underinsured individuals - even insured individuals with high deductibles - can reduce out-of-pocket expenses, as well as receive discounts for services normally not covered by insurance. Further, in many instances, discount plans for ancillary health services and products, such as vision, dental and chiropractic, often make better sense and can save more money than insured plans with high deductibles, caps, exclusions, and low reimbursements.

A good example of value is the New Benefits' pharmacy benefit. This plan guarantees the lowest possible prescription price on any given day at a participating local pharmacy, and a minimum savings of $5.00 per prescription, below retail pharmacy price on brand name and generics, by using the mail-order pharmacy. And because our pharmacy benefit is open formulary, members can save money on all medications, not just a select few. With more and more people regularly taking expensive, brand name medications like Viagra, Propecia and Lipitor, the need to save money is becoming increasingly important. For uninsured individuals, particularly those on a fixed income, if the savings provided by a discount card can help ease the financial burdens associated with taking a maintenance medication, then it has provided a valuable service.

As for who really benefits from discount cards, we prefer to let our more than eight million satisfied members speak for us. It is our belief that member testimonials answer more effectively than we ever could. Of course, in asking this question, the opponents of discount cards are referring less to who actually benefits from the discounts, and more to who does or does not profit from the discount cards themselves. Although, thanks to the Bush Administration, the spotlight now shines brightly upon our segment of the industry, we've been providing quality services that work for more than twelve years and have learned a thing or two along the way. Most importantly, we've learned that quality provider networks and excellent customer service create a win-win scenario for all parties involved. And when the spotlight fades and things return to normal, we'll still be here doing business in exactly the same way.

While we recognize that much of the confusion regarding health discount cards has more to do with politics than with discount cards in general, we believe strongly in addressing the very real issues that have been raised. As health insurance premiums, deductibles and co-payments continue to increase at an alarming rate, the number of underinsured and uninsured Americans also rises. Unfortunately, we cannot reverse this trend for insurance products; but we can continue to provide non-insurance options to the growing number of individuals who need money-saving alternatives now!

About the Author

Terry Tullo is president of New Benefits, a privately held company, with 100+ employees located in Dallas, Texas. New Benefits has been wholesaling and servicing customized discount health benefit programs since 1990. With over 4,000 groups and 10 million members, New Benefits is best known as the single source solution for responsiveness and flexibility to tailor any health benefit program, including insurance and association products, to meet client specifications. With the recent acquisition of miQuotes LLC (www.miquotes.com), New Benefits can provide clients with a customized online quoting engine for insurance products. The A-Z backroom support, with best in class fulfillment and customer service, provides the solid foundation for clients to launch and sustain a successful marketing campaign. New Benefits’ entire focus is ensuring real value and a positive member experience every time the benefits are used.

© 2007 New Benefits

Discount Card Benefits
Know What You Are Getting

It seems that discount programs have been around for a long time. If you think about it, every time you join a new organization it seems that part of the offering is discounts on flowers, car rentals, amusement park tickets and so on. And, just when you think you have something special, it turns out you could have gotten the same discount or better somewhere else. These types of benefits are at no cost to the sponsoring group and the member doesn’t pay anything for them. In the industry, we call these “fluff or freebie” benefits.

Today, I’m going to be talking about non-insured discount benefits that are not fluff. They have a cost because there is a tangible value to the member.

Although we’re going to be focusing on why employers want and need these benefits, they also play an important part in the sales and marketing strategy to help insurance companies boost revenues and increase persistency.

Most non-insured benefits are typically point of sale discounts where the provider receives payment at the time services or products are purchased. The basic premise here is to provide a discounted cash transaction, in exchange for driving traffic to participating provider locations. Providers look at it as another form of advertising and added exposure.

Benefit programs can be either bundled into packages or offered individually. Sometimes it also makes sense to bundle different types of benefits together in an offering such as travel, legal and health to deliver a robust package to employees.

Why should you care? You should care because this is a unique way to sell more insurance as well as provide another revenue stream. Case and point, my company, New Benefits, which was founded over 11 years ago, started as a vision company. Interestingly enough, when we began to add pharmacy, dental, chiropractic and others to our product offering, we instantly began to sell more vision. So much so, that today, we have over 8 million members in that program, while any other combination of benefits make up about 1/10th of our business.

These types of benefits are typically low cost – but just because they are low cost – does not mean they are low on the importance scale. In fact, because they are inexpensive, buying obstacles or barriers of entry are diminished or eliminated. The “add on” is a relatively simple sale. Not only are these benefits great door openers – but they keep the door open for you to go back the next year and sell additional insurance.

Let me use life insurance to illustrate how these benefits can affect persistency. With life insurance, you have to die to actually benefit from having taken out a policy. Life companies who sell or give away one or more of these benefits find that every time a member uses their company’s non-insured benefit card, they are reminded that ABC Life company is helping to either save them money or is providing a valuable service. So much so that the savings could help offset the insurance premium!

Best of all, once you sell it, it manages itself. It’s easy to track – no paperwork, reimbursements, or hassles. And, as is the case with health benefits, there are no health restrictions. Everyone qualifies!

Now let’s take a closer look at some of the benefits. I’m going to begin with motor clubs because they are the newcomer to the fold having started in the worksite arena via payroll deduction a mere 18 months ago. A good motor club benefit helps to keep employees on the job. Employees won’t lose additional time at work because they’re stranded, locked out, have a dead battery or car trouble.

Travel Clubs can allow some employees to travel who couldn’t otherwise afford to. Since there is a great deal of enthusiasm related to travel, it can be a great affinity builder. While helping employees save money on travel expenses, it can also provide a great way to save on business travel expenses.

Legal Clubs offer easy access and excellent rates for emergencies as well as common needs like drafting wills, reviewing documents and offering telephone advice and writing letters on your behalf. These types of services really help to cut down on time spent away from the office.

At New Benefits, I’m constantly asked what’s on the horizon. We typically spend about 1 year in research and testing. With more pets than people – it’s around 300Million pets and 260 million people; we’re in the process of developing a Vet Network with discounts on veterinarian services and products. I think this is going to be one of the hottest benefits in the next couple of years. You’ll also see benefits such as info lines, concierge services, and elder care growing in appeal.

Recently I needed a new pair of glasses. Since my husband works for Xerox he had enrolled us in the Cole Vision 1 insured plan. Seeing a challenge ahead of me, I decided to do some price comparisons.

When my husband purchased his glasses, he didn’t pay a dime because the frames were under $100.00 and he only needed single vision lenses – and lenses were covered up to $55.00. This was the extent of the benefit – but nonetheless, it worked for him (el cheapo) and he was euphoric.

On the flip side, when I purchased these glasses the results were drastically different. Granted, my taste is more expensive than my husband’s. But after looking at the numbers, I was truly paying less money out of pocket with the Coast to Coast discount plan. Plus, I would continue getting discounts on as many pairs of glasses as I want throughout my membership year. With the insured plan, my husband can’t buy another pair of glasses for two years – and he deserves to live happily ever after with his frames.

This is a typical scenario of how ancillary insured health products are nothing more than a pre-payment plus administrative fee, AND the insured benefit is limited. Not so with discount plans!

I’m not trying to overwhelm you with statistics – but to appreciate the timeliness of these benefits, you’ve got to understand the market and the opportunities it presents . . .

• 3 to 6 million Americans suffer from “panic” attacks.
• In 1995, companies with 100 to 500 employees had 15.3% of workers who were uninsured.
• Is it any wonder that Computer Vision Syndrome affects 90% of employees who work on computers?
• Finally, in 1999, beneficiaries who were not in jail, mental or any other kind of institution spent $410 on prescription drugs and approximately $2400 on total out-of-pocket health care costs. That $2400, which is more than most people pay for their electric bill, is equivalent to 18% of their income.

The statistics are staggering!

This is a relatively new industry – so look for pioneers - those who have been in it for 5 years or more.

Check out the “brick and mortar”. Anyone can create a slick marketing piece and state-of-the-art Web page, but you’ve got to be sure the organization actually has the staff to support your initiatives – from Administration, Customer Service, Provider Services to recruit providers and nurture relationships with other vendors, and on-site fulfillment. It’s important to control all aspects of back room support in order to ensure a commitment to Quality.

Test the product. Look at the size of networks, accessibility, savings guarantees, satisfaction guarantees and quality of programs. For example, is the pharmacy program “open formulary” where the physician can prescribe the very best medication for that particular ailment or condition vs. prescribing off of a limited list of drugs.

Value and Price - just because companies appear to offer the same benefits, does not mean the benefits work the same way. Let’s take a Mercedes and that wonderful Ugo. They both had 4 tires, a steering wheel, windows, doors, etc. They both would get you from Point A to Point B – but if you chose the Ugo, to quote the late Bette Davis, “You’d better fasten your seatbelt cause it’s going to be a bumpy ride.” Not to mention that in an effort to manufacture such an inexpensive car, the Ugo did not have reverse lights. In other words, do the benefits have all the important features and do they go above and beyond to provide value.

Flexibility – can the company package all types of non-insured products? Can the company private label? What technology is utilized to process fulfillment kits? What do the membership cards look like? Paper or plastic? Are they 4 color? Can they look like whatever you want them to look like? What vehicles are available to access up-to-date provider listings (Internet, VRU, Customer Service, listing in membership kit)?

Check out the references. An impressive list – doesn’t always mean clients are satisfied.

Do your homework because your reputation and good name are on the line!

About the Author

Terry Tullo is president of New Benefits, a privately held company, with 100+ employees located in Dallas, Texas. New Benefits has been wholesaling and servicing customized discount health benefit programs since 1990. With over 4,000 groups and 10 million members, New Benefits is best known as the single source solution for responsiveness and flexibility to tailor any health benefit program, including insurance and association products, to meet client specifications. With the recent acquisition of miQuotes LLC (www.miquotes.com), New Benefits can provide clients with a customized online quoting engine for insurance products. The A-Z backroom support, with best in class fulfillment and customer service, provides the solid foundation for clients to launch and sustain a successful marketing campaign. New Benefits’ entire focus is ensuring real value and a positive member experience every time the benefits are used.

© 2007 New Benefits