Health literacy is the ability to obtain, process, and understand basic health information and services to make appropriate health decisions. A study by National Assessment of Adult Literacy (NAAL) found that only 12% of American adults have proficient health literacy. Thirty-five percent have basic or below basic health literacy. Lack of basic health literacy affects how employees use their insurance benefits and can lead to more chronic health conditions, which can affect the cost of healthcare for employers and employees. Employees may rely on their employer to help them navigate health insurance, but with the rising cost of health insurance, it is so important for employers and employees to be informed.

Health insurance is very complex, but having a grasp of the basics helps. The very basics of understanding health insurance are outlined below, including a few key terms, how to know what your plan covers, and how to get help when you or your employees have questions.

Key Health Insurance Terms

Health Maintenance Organization (HMO): A health care financing and delivery system that provides comprehensive health care services for enrollees in a particular geographic area. HMOs require the use of specific, in-network plan providers.

Preferred Provider Organization (PPO): A type of health insurance arrangement that allows plan participants relative freedom to choose the doctors and hospitals they want to visit.

In Network: Refers to providers or health care facilities that are part of a health plan’s network of providers with which it has negotiated a discount.

Premiums: The monthly fees established and charged to the Group Policyholder to cover the provision of benefits to Members.

Covered Expense: A charge for a service or supply that is “Medically Necessary” and eligible for payment under this Certificate.

Co-pay: A specified dollar amount that is required to be paid each time covered services are provided, subject to any maximums specified in this Policy.

Deductible: The amount of “Covered Expenses” you are required to pay each Contract Period before insurance will pay for Covered Expenses.

Coinsurance: A specified percentage of “Covered Expenses” you are required to pay each time covered services are provided, subject to any maximums specified in the Policy.

Balance Billing: Balance billing is sometimes called extra billing and is the practice of a healthcare provider billing a patient for the difference between what the patient’s health insurance chooses to reimburse and what the provider chooses to charge. This usually comes into play when a member goes to an out-of-network provider who charges more than the insurance company has negotiated for an in-network provider to charge.

Maximum Out-Of-Pocket (MOOP): The maximum amount of money you may pay for medical services in a calendar year. After this amount is met, the insurer pays any remaining amounts on covered expenses (may not include copays or deductibles). The exact definition depends on the insurer’s definition of the term, but knowing their MOOP can help members budget for possible healthcare costs.

Deductible and Coinsurance Limit: Includes Deductible and Coinsurance amounts for certain medical expenses that you are required to pay when a covered service is provided. Pharmacy expenses and certain medical expenses are not included in the Deductible and Coinsurance Limit.

Know What Your Health Insurance Plan Covers

• Save your new member paperwork. Most health insurance companies will send a welcome packet with valuable information about your plan. Review it when you get it and save it for future reference.
• Find and review your Summary of Benefits and Coverage (SBC) and Member Certificate. The Summary of Benefits and Coverage is a condensed summary of what is covered. The Member Certificate is a longer document, showing everything that is covered. These documents will show what is covered by the plan, including what copays, deductible, and coinsurance may be involved.
• Read the glossary. Terms like “Maximum Out-of-Pocket” can have a different definition of what is covered, depending on the health plan. The SBC will often cover these definitions, but it is a good idea to read the glossary of health terms in the Member Certificate to learn how your plan defines terms.

Get Help When You Have Questions

• Call the insurance company. Even with the certificate, you may be unsure how your insurance classifies certain services. I always recommend that customer care be called for questions or concerns.
• Check the website. Most health insurance companies supply a wealth of information on their websites. They may have different log-in areas where you can obtain information about your plan or claims.

The Employer Group believes informed clients and their employees are educated healthcare consumers.  If you need an HR partner who does the same, please contact us!