Half of U.S. Adults Fail ‘Health Insurance 101,’ Misidentify Common Financial Terms in Plans 

AICPA Survey finds many Americans need to brush up on basics as healthcare mandate approaches 
Published August 27, 2013

Contact: Jonathan B. Cox, 919-402-4499, jcox@aicpa.org or Mitchell Slepian, 212-596-6177, mslepian@aicpa.org

New York (August 28, 2013)
–As Americans prepare to make critical decisions about health insurance, a majority are struggling to understand basic financial terms found in the plans, according to a new telephone survey conducted for the American Institute of CPAs by Harris Interactive.

The telephone survey of 1,008 U.S. adults conducted late last month found that more than half, 51 percent, could not accurately identify at least one of three common health insurance terms: premium, deductible and copay. A third, 34 percent, thought a premium was an expense at the time of receiving medical service or a prescription; more than a quarter, 27 percent, thought a copay was the cost of obtaining insurance; and 12 percent did not know a deductible is the money one pays before an insurance company makes payments.

“Half of Americans would fail health insurance 101,” said Ernie Almonte, CPA, chair of the AICPA’s National CPA Financial Literacy Commission. “That’s critical insight as consumers prepare to make important decisions with implications for both their physical and fiscal well-being. Americans need to take time in the coming weeks to familiarize themselves with key terms and assess their needs so they make the best decisions for their health and financial situations.”

The Affordable Care Act, commonly called “Obamacare,” requires individuals to buy health insurance or pay a penalty beginning next year, with open enrollment starting in October. Despite the coming milestone, the survey found limited knowledge of the healthcare law and its implications. Forty-one percent said they are not at all knowledgeable about the law and another 48 percent said they were only somewhat knowledgeable. Young people were the least knowledgeable, with nearly half, 48 percent, of adults aged 18 to 34 saying they had no knowledge.

For 11 percent of U.S. adults, the upcoming requirement to buy health insurance is their biggest financial concern. For half of the small minority who don’t have health insurance – 14 percent, according to the survey – figuring out how to pay for it is their biggest concern about the mandate.

The National CPA Financial Literacy Commission offers these tips on considering health insurance:

  • Review your history and behavior. Before considering health insurance plans, think about your health history and behavior. Are you prone to illness? How many times in the past year did you visit the doctor or purchase medication – or should you have? Do you engage in sports or risky pursuits that make you more susceptible to injuries? Are you planning to start a family? The answers to these types of questions can help you better assess costs and coverage.
  • Compare premiums.  A premium is the fee paid, usually monthly, to a health insurance company for coverage. It is often the starting place when comparing health insurance plans since consumers want to know first if a particular plan will fit within their budget. Premiums can vary based on a number of factors, including age. It’s best to shop around.
  • Compare other fees. A deductible is the amount paid toward medical expenses before an insurance company begins to pay. A copay is the amount paid each time you visit a doctor or get a prescription. Coinsurance is the percentage of medical costs that you have to pay after you satisfy the deductible. The fees can add up, so it’s critical to understand how they apply and how they vary across plans. Some key questions: Do you have to satisfy the deductible annually or each time you are hospitalized? Do different deductibles apply to different types of care? What is your out-of-pocket maximum?
  • Compare coverage. Each plan typically has different features. You’ll want to understand whether a particular policy has coverage limitations or include a maximum benefit ceiling. You’ll also want to know if it sets limits on the doctors you can visit or if you have to get a referral to see a specialist.

More tips and advice on evaluating and choosing health insurance plans are available on the AICPA’s financial education site, www.360financialliteracy.org.

Harris Interactive conducted the telephone survey on behalf of the AICPA within the United States between July 26 and July 29, reaching a nationally representative sample of 1,008 adults aged 18 and older by landline and mobile phone. Percentages are based on those responses. For more information on the survey, including the full methodology, please contact Jonathan B. Cox at 919-402-4499, jcox@aicpa.org, or Mitchell Slepian 212-596-6177, mslepian@aicpa.org.


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