From time to time, national surveys are conducted asking adults to define some “basic” health insurance terms: deductible, copay, coinsurance, and out-of-pocket maximum. The results illuminate the need for clarity and education
what is a fragmented and complex healthcare system. Houston
Chronicle: Confusion reigns among health insurance shoppers
As the article above states, only 5% in Houston correctly defined all four terms. 42% nationally said they were not confident they could pick the right plan for them when presented with options. In a similar 2013 survey, more than half of the adults surveyed (51%) could not accurately identify at least one of premium, deductible, copay.
And yet, these terms are the cornerstones to how we typically compare plans. Americans are picking plans that, without the right information, can be leaving them grossly over-insured or under-insured. And yet, the amount Americans spend out of their own pocket is often significant to their family’s bottom-line.
The lack of clarity for such a high-budget item is leading toward an epidemic, and highlights the need for health consumer education. Here are the definitions for some of they key terms, including those surveyed:
How much you have to spend for covered health services before your insurance company pays anything (with exception to free preventive services). If your plan summary shows that the deductible is waived for a particular service, you will pay that copay or coinsurance without having to meet the deductible first.
Copayments and Coinsurance:
Payments you make each time you get a medical service after reaching your deductible. If you have a plan with no deductible, the copays and/or coinsurance go into effect right away. If the plan summary shows a percentage, that is your coinsurance. You the member will always pay the amount 50% or lower (so, if the plan summary shows 70%, you the patient are responsible for the remaining 30%).
The most you have to spend for covered services in a year. For most plans this is a calendar year, but it could be the plan year of your employer, for example. Seek this clarification if you aren’t sure. After you reach this amount, the insurance company pays 100% for covered services until the next plan or calendar year starts.
The amount you pay for your health insurance every month. This is essentially the cost you must pay just to access and have healthcare benefits (it is separate from the deductible, copays, coinsurance, etc.) A portion (or all) may be paid for by your employer. The plan with better benefits (typically) has a higher premium.