Health-insurance terms giving you a headache?

It's health-plan enrollment season, and many people find the options complicated and difficult to understand. The jargon can be overwhelming, and it can lead people to make to costly mistakes or avoid care all together.

Solicit opinions about health insurance and you're almost guaranteed to find consensus: It's mystifying and irritating.

"It just seems like a lot of the buzzwords are intended to just complicate the whole thing and make it more expensive," said David Turgeon, 46.

Ronen Ben-Simon, 28, said some basic health insurance terms are lost on him — even though he's a nurse. "I don't even know what 'co-insurance' is, to be honest," he said.

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Seanne Thomas
Seanne Thomas, 50, says she's had to become good at figuring out how health insurance policies work.
Mark Zdechlik | MPR News

"Co-insurance," if your plan has it, kicks in after you've met your deductible and requires you to pay a set percentage of medical bills.

Seanne Thomas, a 50-year-old real estate broker, said she's gotten good at figuring out how health insurance policies work. She's had to, because her family members are covered under three different plans. "So I had to compare co-pays, I had to compare out-of-pocket, you know, deductible and maximum coverage and ... "

So how about a quiz? Here's a scenario, developed by American Institutes for Research:

A guy goes to the doctor to get a wart removed. The bill is $530. He has a co-pay of $30, a deductible of $100 and co-insurance of 20 percent. How much is he on the hook for?

Thomas nailed the co-pay and deductible, but then ran aground.

"I don't know what you mean by the term 'co-insurance,'" she said. And without knowing that term, she's out of luck.

Most people would be in the same position. A couple of years ago, American Institutes for Research asked hundreds of people and found that only 1 in 5 got the right answer, which is $210.

"People really struggle with understanding health insurance for a variety of reasons," said Kathryn Paez, who researches health insurance literacy for the organization. "One is just the volume of information. There's a lot to know. The other is because the language is unfamiliar to them and they don't really understand health insurance terms and concepts."

And that unfamiliarity, Paez said, is greater among African-Americans, Hispanics and people with low incomes and low levels of education. But even highly educated people can struggle.

Professor Kathleen Call
Kathleen Call, a professor with the University of Minnesota's School of Public Health, says there's a lot at stake when people make uninformed decisions about selecting and using health insurance plans.
Mark Zdechlik | MPR News

"We've created a monster and it's not surprising to me that there's literacy issues," said Kathleen Call, a professor in the University of Minnesota's School of Public Health. "I've studied this stuff, and sometimes I make mistakes."

Call has grown increasingly concerned that the complexity of insurance could compromise public health.

"People are treating it more like car insurance: You don't use it until something happens," she said. "You have an accident, then you use it. Otherwise you're trying not to use it. And that's not the way we want health insurance to be used."

Call said people are leery because there's a lot of money at stake and an uninformed choice can be financially devastating.

"That mistake can mean the difference between ... paying that medical bill or paying rent," she said.

Surveys confirm that growing numbers of Americans avoid care because of the cost.

Even Jim Schowalter, president of the Minnesota Council of Health Plans, agreed there's a problem. Schowalter said health insurance is getting more complicated because insurers are adding intricate cost-sharing provisions to keep down the cost of monthly premiums.

Schowalter said the industry is working to make policy language more understandable, but he conceded there's still a long way to go.

"It is really on the industry to keep on explaining things in simpler language to help streamline what people are offered so that they get exactly what they're looking for," he said.

Consumer advocates advise people to take advantage of a growing number of online tools that can help demystify health insurance terms and to demand clarification of those terms from their insurer.