Americans Don't Really Understand Health Insurance Terms

The open enrollment period is about to end for people who want to buy health insurance through Healthcare.gov. Americans have until March 31 to enroll in coverage for 2014, while the proposed open enrollment period for coverage starting in 2015 runs from November 15, 2014, through January 15, 2015. Unfortunately, many Americans do not understand basic insurance terms, making it difficult for them to compare plans and find the best coverage. This lack of understanding could result in some people going without insurance for 2014, so be prepared to assist these people by offering payment plans or discounts for self-payment.

Those in need of health insurance should be prepared to shop around and pick plans based on their needs, according to the Arizona PIRG Education Fund. For Americans who do not understand insurance terms, picking the right plan is difficult. Approximately 35 percent of English-speaking adults in the United States struggle with basic health literacy, reports the Office of Disease Prevention and Health Promotion. This makes it difficult to obtain and process health information.

Fifty-three percent of English-speaking adults have intermediate levels of health literacy. This means they are able to read the instructions on a prescription label and determine the right time to take their medications. Only 12 percent of English-speaking adults are proficient with health literacy. This means they can use tables to determine their health insurance costs for a particular year. One thing insurance companies and medical facilities can do to promote better health literacy is provide health information in more than one language. Blacks and Hispanics are more likely to have below-basic levels of health literacy, which could be due to language barriers and cultural differences.

The Health Reform Monitoring Survey, which was initiated by the Urban Institute in 2013, helped researchers collect data on 2,400 children and 7,400 nonelderly adults. The survey raised some concerns about how well Americans targeted by the health exchanges understand topics such as healthcare affordability and access to healthcare. Only 39.9 percent of the respondents understood all of the key terms covered by the survey. These terms were excluded services, covered services, copayments, annual limits on services, deductibles, maximum out-of-pocket spending limits, coinsurance, deductibles, premiums, and provider networks. Respondents also indicated their main source of health insurance information is friends, colleagues, and family members. This could explain some of the confusion surrounding the meaning of certain healthcare terms.

Now that most Americans are required to have health insurance, millions of people will be signing up for coverage through the insurance marketplace. People who do not know basic terms such as premium and out-of-pocket maximum will have a hard time picking health insurance plans that will meet their healthcare needs—which is why it is so important to work on increasing health literacy in the United States.

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