Deductibles, cost-sharing, premium tax credits-- there are a lot of healthcare benefit terms that many Americans don't fully understand. Making a decision about healthcare benefits can be difficult if there is a learning curve present. According to Taking Stock and Taking Steps: A Report from the Field after the First Year of Marketplace Consumer Assistance Under the ACA, a report compiled by the Kaiser Family Foundation and the Robert Wood Johnson Foundation, healthcare and insurance literacy barriers are “huge.” This article will help to break down the healthcare benefits literacy barrier.
The Healthcare Benefit Literacy Barrier
The Kaiser Family and Robert Wood Johnson Foundations conducted a national roundtable with Marketplace Assisters to find out about the challenges of assisting consumers with selecting a healthcare plan. Their report was based upon the responses compiled from the roundtable discussion.
One of the biggest challenges highlighted in the report was educating consumers about healthcare benefits. The participants reported that many consumers had difficulties making plan choices and using their coverage effectively due to the fact that many consumers did not understand basic healthcare benefit concepts.
According to the report, “many consumers didn’t understand basic concepts like how a deductible works or why premiums must be paid every month.” In addition, “many consumers also had trouble understanding ACA premium and cost sharing subsidies.
Breaking Down the Healthcare Benefit Literacy Barrier
Here are explanations of the healthcare terms that consumers have a difficult time understanding:
Cost-sharing subisdies: cost sharing subsidies are designed to help individuals and families pay for their deductible, co-insurance, and co-payments. The cost-sharing subsidies are available in addition to the premium tax credits, which help eligible individuals pay for their monthly health insurance premium.
The cost sharing subsidies essentially allow individuals and families to pay for a standard silver plan, but get richer benefits. According to the report, consumers understand the term better when described as an “upgrade.”
Deductible: the amount paid for covered care before the insurer begins to pay. For example, a family or individual may have to pay $500 out-of-pocket for covered services before the insurance company pays; this would be a $500 deductible.
Individual Shared Responsibility: (individual mandate) if an individual fails to purchase health insurance that qualifies as minimum essential coverage, and does not qualify for an exemption, they will pay the individual shared responsibility payment.
According to the report, the report, there is a need for “better terminology to replace problematic terms such as ‘penalty’ as a descriptor for what happens to consumers if they fail to enroll.”
Premium Tax Credit: as part of the ACA, the federal government provides premium tax credits to help many people buy more affordable individual health insurance coverage through the Health Insurance Marketplaces.
The health insurance tax credits are "advanced-payable" meaning they can be applied toward employees’ premiums when they purchase health insurance coverage. According to the report, consumers understood the term better when described as a “monthly discount coupon.”
Having a better understanding of the language used to describe healthcare benefits and ACA provisions will help to make a well-informed healthcare benefits decision.