Health insurance literacy is a term that has been used a lot in the media since the Affordable Care Act (ACA) rolled out a few years ago.
It basically means how fully a person understands how his or her health insurance works, as well as the lexicon of insurance-speak: words and acronyms like coinsurance, copay, deductible, premium, subsidy, provider, allowed amount, out-of-pocket maximum, balance billing, HSA, FSA, HMO, PPO, EPO, PCP, and so on.
If only people understood their health insurance, the experts moan, they would make better health choices and protect themselves financially.
I’m sure that’s true, but I can tell you from experience that the insurance companies are not making it easy to understand their policies. If anything, I find them increasingly complex and poorly explained.
Related story from Kaiser Health News: Lack Of Understanding About Insurance Could Lead To Poor Choices
Even more aggravating is that the customer service specialists, who we should reasonably expect to have the answers we seek, simply don’t.
A couple of weeks ago I posted that I was shopping around for a new health insurance policy for 2016. I narrowed my selection to two: a Lifewise (Anthem) Bronze EPO plan and a Lifewise (Anthem) Bronze EPO HSA-qualified plan. [EPO=Eclusive Provider Organization; HSA=Health Savings Account]
The HSA has a slightly lower premium, but no copays. I would have to pay the full amount for an office visit, urgent care visit or trip to the emergency room. The non-HSA plan has copays: $30 for a PCP (primary care provider), $15 for Teladoc, and $250 for emergency room visits.
I decided I liked the plan with the copays.
But before I committed, I read through the list of covered benefits again. The chart was fairly easy to understand (I have been dealing with insurance companies for over 30 years, after all), but one line item confused me. Under “Emergency Room Services” the benefit was listed as “$250 copay + 20% coinsurance”.
What did that mean?
I understand a copay (a fee at the time of service) and I understand coinsurance (the percentage paid after the deductible is met), but what did they mean when used together like that? Paying a copay on top of the coinsurance seemed like being punished for going to the emergency room. That didn’t make sense to me.
I decided to call Lifewise Customer Service and ask.
First I was connected with a customer service specialist. She pulled up the plan benefit sheet on her computer and was silent for a moment while she read it.
She wasn’t able to answer my question. “I’m sorry. I don’t know what this means, either. Why don’t I transfer you to one of our sales representatives? They might be able to help you better.”
“Thank you.” Click. I was disconnected. 😡 I called back and asked to speak directly to a sales representative. Again I waited while she read through the plan’s benefits.
“Well, it looks like you pay the $250 up front, and then you pay the remainder of the bill towards the deductible. After you meet the deductible, you pay 20% until you reach your out-of-pocket maximum.”
“So, with the HSA plan I just pay towards my deductible and then 20%, but with the non-HSA plan I pay an extra $250 on top of that? Am I reading this right?”
“Yes, I think so. I’m looking at the same chart as you, and I’m pretty sure that’s what it means. The $250 is meant to deter you from going to the emergency room for non-emergent reasons. But the copay is waived if you are admitted to the hospital,” she added, trying to be helpful.
Well, paying an extra $250 would definitely be a deterrent, but it also made the plan less attractive than the HSA plan. Still, I wasn’t confident that the sales rep really knew what she was talking about, either.
Finally, I contacted my state’s health insurance exchange. Perhaps this customer service specialist was reading from a better-worded description, or she was just more knowledgeable, but she gave me an answer that I felt was the most sensible. For emergency services, I would pay a $250 copay, unless I had already met my deductible, then I would pay the 20% coinsurance until my out-of-pocket maximum was reached.
Does that make sense? To me it does, but then I’ve had a while to work my brain around it. 😉
So, regarding health insurance literacy, I would say let’s first encourage the insurance companies to write clear explanations about their benefits (I’m sure they aren’t being confusing on purpose, are they?), and better educate their customer service and sales reps.
I’m hoping for the best with my new health insurance policy, but I honestly expect to be surprised about something regarding my coverage, no matter how hard I’ve tried to be “literate.”
And if I’m feeling stupefied by our insurance system, how are you feeling?
Related resources to increase your insurance literacy!