University of Pennsylvania founder Ben Franklin once said, “In this world, nothing can be said to be certain except death and taxes.” That may have been true back in Mr. Franklin’s time, but today, it seems having questions about health insurance plans and policies is just as certain. Even Penn Medicine experts who study health care policy have trouble deciphering the ins and outs of various plans. According to an article from CNN, as of mid-January 2015, “more than 7.1 million people signed up for 2015 coverage in the 37 states using healthcare.gov, while 2.4 million did so in the 13 states and Washington, D.C., which run their own exchanges.” Though over 9.5 million people have signed up, there is still confusion among many as to how to select the right plan.
In a study published earlier this year in the Journal of Adolescent Health, researchers from Penn and the Children’s Hospital of Philadelphia (CHOP) found that even college-educated, technically savvy adults in their 20s and 30s have a tough time navigating health insurance policies, and selecting plans on Healthcare.gov, the official site of the Affordable Care Act.
Results of the study showed half of the participants couldn’t define “deductible,” and three-quarters couldn't explain “coinsurance.” Unfortunately, these terms are all part of basic health insurance lingo. If college-educated adults and even experts in the field experience confusion, how can the general populous, including low-income patients who may be living with or at-risk for chronic illnesses and in need of regular care, be expected to choose a plan that not only covers their needs but is also affordable?
While more recent research from the same group at Penn Medicine and CHOP found that websites for national and state health insurance marketplaces are improving efforts to assist patients in choosing health insurance plans through tools such as calculators and price estimators, the Penn experts say the process is still far too confusing.
“The danger here is that not understanding the difference between a deductible and coinsurance could leave people exposed to financial risks, and in many cases, financial risks they cannot afford,” said Charlene Wong, MD, a Fellow in Penn's Leonard Davis Institute of Health Economics and the division of Adolescent Medicine at CHOP, who admits even she chose the wrong health plan for herself and her family. “Anyone who doesn't understand the health insurance terms is going to have an incredibly difficult time making the best decisions when they shop for health insurance.”
Here’s a quick rundown of some of the most common health insurance terms that may be useful for people when choosing a plan and what costs they can expect to incur when the need for health care arises:
Benefits: A general term referring to any service or supply covered by a health insurance.
Co-pay: A specific charge that your health insurance plan may require that you pay for a specific medical service or supply.
Coinsurance: The amount that you are obliged to pay for medical services (after co-pays or deductibles). Coinsurance is typically expressed as a percentage of the total charge.
Deductible: A specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to make payments for claims.
Health Maintenance Organization (HMO): Plans that offer a wide range of health care services through a network of providers. As a member of an HMO, you will choose a primary care physician to provide most of your health care and refer you to specialists as needed.
Medicaid: A state-funded healthcare program for low income and disabled persons.
Medicare: A national health insurance program to cover the cost of hospitalization, medical care, and some related health services for most people over age 65 and certain other eligible individuals.
Out-of-pocket maximum: An annual limit placed on all cost-sharing which patients are responsible for under a health insurance plan.
Preferred Provider Organization (PPO): A plan that requires your medical care to come from doctors or hospitals on the insurance company's list of preferred providers, if you want your care paid at the highest level. Unlike an HMO, PPOs do not usually require care to be coordinated through a single primary care physician
Premium: The amount paid to the insurance company for your health insurance coverage. This is typically a monthly charge.