October was Health Literacy month. If you missed it, you’re not alone. In the United States, being health literate is about as common as having a master’s or doctorate level education. Only 12% of Americans are proficiently health literate, meaning the vast majority of us lack the capability to process and retain health information and make informed health decisions. And this has real consequences; low health literacy is associated with high rates of healthcare spending, and even worse, more frequent hospitalizations.
As we enter the third open enrollment period, health literacy will play a pivotal role in allowing people to not only get covered through a health insurance plan, but also understand how to use it to optimize their health care. Yet understanding a health plan is complicated; understanding your premium and its relationship to your deductible, calculating your out-of-pocket costs, and knowing where and when you can use your insurance doesn’t come naturally to most. In fact, a recent study found that the vast majority of millennials couldn’t calculate the costs of their plan while 50% couldn’t define what “deductible” meant. Wellthie decided to discover the state health literacy on the streets of New York, documented in the video below:
In this video we asked New Yorker’s to define common health insurance terms. We’ve also defined these terms with examples below for reference:
1. Premium: the amount you pay per month for health insurance coverage
Example: Most individuals will pay a premium under $100 per month for their marketplace health plan thanks to tax credits.
2. Deductible: the amount you’re responsible for paying before your insurances starts paying for health services.
Example: The average 2015 marketplace deductible for a silver plan was $2,563, meaning you would need to spend $2,563 on health care services until your insurance pays.
3. Copay: a flat fee you pay for medical services
Example: Since in the Affordable Care Act passed, preventive services have a $0 copay. So now you can get your flu shot at no cost!
4. Coinsurance: the percentage of the bill you pay for medical services
Example: If your plan details say that you have 30% coinsurance on visiting a specialist, your insurance will pay for 70% of the visits cost. It pays to shop around for the best value (price and quality) from health care providers.
5. HMO: a type of plan that limits coverage to care from doctors who work for or contract with the HMO.
Example: HMO’s, like Kaiser Permanente, generally do not cover out-of-network care, but consumers save money when accessing these providers.
6. PPO: a type of plan that contracts with medical providers to create a network with broad choice of providers. Benefits are available in and out of network, but you pay less to use the contracted in-network providers.
Example: A PPO is generally the least restrictive type of plan since you have a broader choice of doctors you want to see, but they often come with a higher premium.
For a comprehensive health literacy quiz, take Kaiser Family Foundation’s Health Insurance Quiz and to learn more about your health insurance, read our article “5 Things to Consider When Choosing a Health Plan.” Don’t be caught unprepared this open enrollment. Prioritize health literacy, get covered, and be healthy.