Health Insurance 101. You Need This Class More Than You Think!

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March 3, 2021 by Lisa Brammer

About seven years ago, I wrote a blog called, “Understanding Health Insurance, it’s not Rocket Science—or is it?  What I found while doing my research was that people thought they understood their health insurance but in reality they did not.

Fast-forward seven years. Let’s take another look at the subject and see how we are all doing. Sadly people, it isn’t good.

In my original blog on the subject I quoted a Carnegie Mellon University study that reported that only 14 percent of participants accurately understood the four basic concepts of their health insurance.  Sadly that number continued to drop—like a stone. According to a survey conducted by Policygenius in 2016 only 4 percent of the 2000 people surveyed understood those same four basic terms: deductibles, copays, coinsurance, and out-of-pocket maximums. And if that wasn’t bad enough, their survey, like the one Carnegie Mellon conducted, found that people thought they understood those terms. But clearly their confidence was horribly misplaced.  If that isn’t a recipe for financial disaster?…

Thankfully, I am able to report that the understanding of those basic terms has improved—somewhat. According to Policygenius’s latest poll conducted in 2019, less than one third were able to correctly define three of the basic terms: copay, deductible, and premium.  It’s not really an apples to apples comparison of the previous survey questions, is it? Especially when you consider coinsurance was the least understood term in the 2016 survey. But what can I say? If they want to spin it as a win, I will too.  

Sadly, the 2019 survey also revealed some other disturbing trends: More than 1 in 4 (27.2 percent) of people with insurance said they avoided treatment for medical conditions because of uncertainty regarding their coverage. Here they are paying all this money for their premiums and they are afraid to use it—how sad is that?! The ACA was developed to help the uninsured obtain affordable coverage, but according to the results of that survey, only 15.6 percent of uninsured respondents knew they could get financial aid to buy an Obamacare plan. That’s a huge disconnect.

Right now, in the USA, healthcare is probably one of our biggest expenses , yet clearly we don’t possess the necessary knowledge to make good, informed decisions when selecting our coverage.   

Even though it’s a complicated confusing topic, becoming more aware and savvy can only help us be better informed consumers. Understanding important health  insurance terminology will not only help us pick the best plan for our circumstances, it will help keep us in tip-top health. 

Here is an explanation of several basic health insurance terms found on the healthcare.gov website. I hope it helps!

  • Deductible: The amount you owe for covered health care services before your health insurance or plan begins to pay.
  • Copayment: An amount you pay as your share of the cost for a medical service or item, like a doctor’s visit.
  • Coinsurance: Your share of the cost for a covered health care service, usually calculated as a percentage (like 20%) of the allowed amount for the service.
  • Premium: The amount you pay for your health insurance or plan each month.
  • Network: The doctors, hospitals, and suppliers your health insurer has contracted with to deliver health care services to their members.

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