Do People Truly Understand their Health Insurance?

Even though health insurance is an important aspect of life, few people fully understand what it entails. Since the institution of the Affordable Care Act (ACA), all United States citizens are required to have health insurance coverage, either through ACA or a private insurer, or they’re forced to pay a penalty. A poll conducted a few years ago reveals that almost half of uninsured Americans did not realize they’d face a penalty if they didn’t seek coverage. So, what does this mean? Do most people not understand their health insurance? Here’s some more information from recent surveys.


Definition of terms


A research team at the University of Pennsylvania conducted a study that revealed some interesting information, mainly that young people, even if they’re highly educated, do not understand the first thing about health insurance. This issue was particularly prevalent regarding what certain terms meant. Some unclear terms, which are vital to understanding health insurance plans, were “deductible” and “coinsurance”. There was widespread confusion where people assumed deductible meant how much their insurer covers before they need to pay, when it’s actually the complete opposite! This misunderstanding led to people signing up for higher plans that they could not actually afford.


What people want


Those looking for insurance, particularly young people who are just starting out in the workforce, want a healthcare plan that’s actually affordable. People looking for insurance want to be able to easily compare rates from various companies and find the plan that fits them the best. They also want to have a basic understanding of what they need, so when they’re reading the terms on an insurance plan, they actually understand what’s being said. Many people “considered a monthly premium of over $100 unaffordable”, yet it’s nearly impossible to easily find plans that meet that requirement.


How did this happen?


You might be wondering, why don’t people understand health insurance? It’s not only young people who are unsure how to interpret healthcare; it’s also “those who use fewer healthcare services, minorities, people with lower incomes and those with less education.” Why are so many people confused about such an important issue? A main culprit is the lack of education about general life skills taught in public schools. Few public schools offer classes that enhance students’ knowledge of valuable life skills, such as cooking, financials matters, and insurance. To help people achieve success later in life, it’s important that they have a basic understanding of these responsibilities as they enter adulthood. Another issue is that insurance companies do not provide a guide of what to look for or give explanations for many of their services. Luckily, this issue seems to be changing as companies attempt to add more information to their sites for users to access.