Warning: This Card Is to Be Used for Medical Purposes Only

A two-year-old California company has begun offering a credit card specifically for medical expenses, enabling cardholders to segregate that category from their other 0purchases.

Healthcare Credit Inc. of Westlake Village, Calif., is positioning the card as an extra benefit companies can offer employees. The card is being issued by Chicago-based Pullman Bank and Trust and is available as either a Visa or MasterCard.

As more doctors and dentists have agreed to accept plastic, more card companies have shown interest in creating products earmarked for out-of- pocket medical expenses.

And consumers have grown more accustomed to charging medical bills on their cards. In the first half, Visa U.S.A. said, $2.3 billion of health- care payments were charged to its cards, an 18.5% increase from a year earlier.

But the intersection of medical costs and charge cards is a tricky one; questions can arise over how the card meshes with a cardholder's health insurance.

And some banks have been reluctant to issue the cards; because most people go to the doctor only two or three times a year, activity on the card is likely to be small.

Glen Uslan, vice president of marketing at Healthcare Credit, said there was "definitely a need" for the dedicated card his company has been marketing since July.

"People are using it for dental work, oral surgery, and cosmetic surgery, but there are many people who have also applied just to have it in their pocket in case of emergencies," Mr. Uslan said.

"It is almost like health insurance backward," he said. "Rather than paying up front and using it as you need it, this way people can use (medical services) and then they pay for them afterwards."

Four companies have signed up so far, Mr. Uslan said. The advantage of his company's offering, he said, is that any doctor who accepts MasterCard and Visa will automatically take the Healthcare Credit card.

"There are other health-care cards out there, but the health-care provider has to actually sign on to accept the card," Mr. Uslan said.

There are other problems associated with cards tied to medical expenses, said Stanley W. Anderson, president of Anderson & Associates in Arvada, Colo. For one thing, banks must extend huge credit lines to consumers who may not use the card that often.

"A medical card has to have typically high lines or it is not going to work," he said.

Mr. Anderson said some companies looked at the issue a few years ago and tried to have a card with two credit lines, one for traditional activity and the other for medical charges.

The product, he said, didn't sell well because people were confused about how to distinguish at the point of sale which credit line to access.

"I think you will probably have confusion with this program, too," Mr. Anderson said. "Even though it is strictly for health-care purposes, as long as it is carrying the Visa brand the cardholder may try and use it for other purposes."

Healthcare Credit said it has counteracted that: The card is electronically restricted so that it can be processed only by certain merchants with medically related codes.

Until now, credit cards specifically tied to these payments were of the private label kind. In 1995, Cincinnati-based Star Bank signed a deal with PulseCard Inc. of Overton, Kan., to issue a private label medical credit card for a $12 annual fee. And in 1993, First Family Financial services contracted with Medplus Corp. to issue credit cards for patients who participated in the Medplus health network.

This year New York-based EMX, a marketer of medical identification cards, revealed plans for a card that could access consumers' health records and be used to charge medical expenses.

The Healthcare Credit card can be used for family and veterinary health care and is offered in two formats.

Corporations with more than 1,000 employees can have their company's name and logo on the card, and cardholders can qualify for credit limits from $500 to $25,000.

The HCC Trilogy Family Benefits is reserved for companies with fewer than 1,000 employees and has HCC's brand on the front.

Both cards carry an interest rate of prime plus 6.5%, with a $39 annual fee.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER