# KY Insurance Advisory Opinion 1998-03: Health Care Discount Programs

> Kentucky · Agency guidance · In force

URL: https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1998-03

## Section

- **Citation:** KY Insurance Advisory Opinion 1998-03
- **Heading:** Health Care Discount Programs
- **Jurisdiction:** Kentucky
- **Kind:** Agency guidance
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Kentucky Department of Insurance Bulletins and Advisory Opinions / Health Care Discount Programs

## Text

The following Advisory Opinion is to advise the reader of the current position of the Kentucky
Department of Insurance ("The Department") on the specified issue. The Advisory Opinion is not legally
binding on either the Department or the reader
Kentucky Department of Insurance
Advisory Opinion 98-03
In re: Health Care Discount Programs
RELEVANT FACTS AND STATUTES: It has come to my attention that the regulation by the Department of
Insurance of health care discount programs is an issue. In general, these plans offer access to a network
of providers by virtue of the member paying a monthly fee. The network of providers charge the
member a discounted fee for the service they perform.
KRS 304.38-030(5) defines health maintenance organization. The statute says:
"Health maintenance organization" means
any person who undertakes to provide,
directly or through arrangements with
others, health care services to individuals
voluntarily enrolled with such an
organization on a per capita or a
predetermined, fixed prepayment basis.
THE DEPARTMENT'S POSITION: If a product covers health care services of its members, rendered by a
provider on a prepaid or capitated basis, the entity offering the product must obtain an HMO certificate
of authority. This involves a transfer of risk from the member to the entity. However, a product that
offers discount provider services is not subject to this requirement if four conditions are met: 1) the
providers in the network do not get paid from the entity offering the product (except the entity can pay
a nominal fee up front to providers); 2) the product only offers access to a network of providers that
give members discounts on their services; 3) the solicitation material clearly states the product is not
insurance; and 4) the entity accepts no risk.
Questions regarding this Advisory Opinion may be directed to Shaun T. Orme, Counsel for the
Department, (502) 564-6032.
_________________________
George Nicholas III

Commissioner
Date: 9/16/98

## Nearby sections

- [KY Insurance Advisory Opinion 1998-01 The Issuance And Renewal Of Health Benefit Plans Under 98 RS HB 315/En](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1998-01.md)
- [KY Insurance Advisory Opinion 1998-02 Hospice Care Coverage Under Health Benefit Plans](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1998-02.md)
- [KY Insurance Advisory Opinion 1998-03 Health Care Discount Programs](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1998-03.md)
- [KY Insurance Advisory Opinion 1998-04 Participation Requirements For Groups](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1998-04.md)
- [KY Insurance Advisory Opinion 1998-05 Damages For Motor Vehicle Loss Of Use And Settlement Of Claims For Motor Vehicles](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1998-05.md)
- [KY Insurance Advisory Opinion 1999-01 Conversion Plans As Health Benefits Plans](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-01.md)
- [KY Insurance Advisory Opinion 1999-02 Use Of Fee Schedules For Payment Of Medical Expenses In Basic And Added Reparation Benefits Coverage](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-02.md)
- [KY Insurance Advisory Opinion 1999-03 Experience-Information Reports Of Insurers](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-03.md)
- [KY Insurance Advisory Opinion 1999-05 Group Claim Experience](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-05.md)
- [KY Insurance Advisory Opinion 1999-06 Claims Practice](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-06.md)
- [KY Insurance Advisory Opinion 1999-07 Dual Rates For Medicare Supplement Policies](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-07.md)
- [KY Insurance Advisory Opinion 1999-08 Any Willing Provider Law](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-08.md)
- [KY Insurance Advisory Opinion 1999-12 Bulletin 98-2 Personal Lines Property Insurance For Earthquake Damages](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-12.md)
- [KY Insurance Advisory Opinion 1999-13 Waiver Of Our Right To Recover From Others Endorsements (Ncci Form Wc 00 01 13)](https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1999-13.md)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/KY_INS_AO_1998-03. Check the current official text before relying on it. Not legal advice.