Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension
A small step toward financial security that everyone should take is to become health insurance literate. An increasing area of concern, as the Affordable Care Act is implemented, is low health insurance literacy. According to a recent survey of 1,008 adults, 51% could not correctly identify at least one of three common terms- premium, deductible, and co-payment. Another survey of young adults found that only 14% could correctly define four insurance terms: deductible, co-payment, co-insurance, and out-of-pocket maximum.
Selecting health insurance is complicated with many “moving parts” including cost, quality of care, plan features, availability of desired service providers, and, in the case of health insurance exchanges, potential tax subsidies. Not surprisingly, studies have found that many people are overwhelmed by health plan options and lack confidence in their ability to select a plan. The term “health insurance literacy” refers to a person’s knowledge, ability, and confidence to effectively choose and use health insurance. A key component of health insurance literacy is an understanding of basic insurance terms such as those listed below:
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