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Insurer finds need to educate public about terms

In the 10 months that Emily Lennon has been an Affordable Care Act navigator, she has reached one solid conclusion: Most people buying health insurance don't speak the lingo.

Employer health care costs are expected to rise nearly 9 percent in 2014, a slight improvement over recent years, according to a new survey.
Employer health care costs are expected to rise nearly 9 percent in 2014, a slight improvement over recent years, according to a new survey.Read moreiStockphoto

In the 10 months that Emily Lennon has been an Affordable Care Act navigator, she has reached one solid conclusion: Most people buying health insurance don't speak the lingo.

"Nobody understands health insurance," said Lennon, who works at Resources for Human Development.

Lennon has found that most first-time buyers, as well as people who were once covered through work but now buy coverage on their own, don't know basic terms like premium and deductible. Start talking coinsurance, out-of-pocket maximum, pharmaceutical formulary, co-payment, in-network providers, tier plans, HMO and PPO, and people get lost in the jargon jungle.

"People think everything is a deductible," Lennon said. "They use the word deductible to mean premiums, co-pays or any costs they have to pay."

Her experience squares with the findings from a Washington University School of Medicine study. The authors, surveying before the opening of the ACA marketplace in October, talked to 51 low-income, uninsured adults and found that most "had very little understanding" of insurance terms.

More than half thought a deductible was "a reduction in cost of care." People didn't understand or misconstrued the meanings of coinsurance (67 percent), out-of-pocket maximum (45 percent), in-network providers (38 percent), and formulary (37 percent).

"There is a general low level of insurance literacy," agreed Paula Sunshine, Independence Blue Cross' vice president for consumer affairs.

The insurer did its own fact-finding last summer with focus groups made up of people who were uninsured, insured through small employers, and who bought plans individually.

"We found the exact same thing," Sunshine said. "Not one person in any of those sessions could correctly identify the difference between an HMO and a PPO."

Coinsurance, unhyphenated, was read by the focus groups as coin surance. "They asked what is 'coinsurance'?" she said. "We had to put in a hyphen."

The results convinced Independence it needed to educate consumers. The first step was to create Health Care and You, an online guide to terms scrubbed of jargon.

"We have a really extensive education and on-boarding experience that we are in the middle of deploying," Sunshine said. "New members are getting phone calls from us making sure they understand what they bought."

Independence will also continue communicating with new customers at 30-, 60- and 90-day intervals via mailings and e-mail to make sure new customers understand the policies they bought and how to use them.

"At 60 days is where we really go over their product highlights" and how the plans work, she said.

The company's Independence Express will hit the road in July for a series of education seminars.

"We take people through an actual episode of care and show them what it means to get a referral, how to use a tier-one provider, and how to have a conversation with a doctor," Sunshine said.

Lennon also uses real examples to show the differences in costs. If a client is considering a plan with 10 percent coinsurance, she explains the term and then does the math. She writes down each dollar clients must pay if they see a doctor or are admitted to the hospital. The note goes home with them when they buy a plan.

"Nobody learns this off the top of their head the first time they go over it," Lennon said. "It wasn't until I started working here and I looked back at my past experience using health insurance that I was like, 'Oh, so that's why I paid $65 for that.' "

BASIC TERMS

Premium: Monthly amount paid to your insurer for insurance.

Deductible: The amount you must pay each year before coverage kicks in.

Coinsurance: The percentage you pay for some covered services. If your co-insurance is 10 percent on a $100 service, you pay $10.

Out-of-pocket maximum: The most you pay in a year for health care.

Tier plan: Customers can visit any network provider but pay different out-of-pocket costs in different tiers.

Resources for Human Development 855-668-9536

For Independence Blue Cross' primer on insurance, see http://bit.ly/1hRJFtw