Insurance IQ: Consumers don't understand basic health insurance, survey finds

Most Americans are happy with their health insurance, although many don’t fully understand it.

More than 90% of men and 80% of women like their plans, a recent Forbes Advisor survey finds. However, more than three-quarters of respondents couldn’t identify the word coinsurance, and nearly half incorrectly defined copayment and deductible – and that’s just the beginning of their confusion about the U.S. health insurance system.

Coinsurance. Only 23% could select the correct definition of coinsurance from a range of choices, and nearly one-third didn’t even want to take a guess. Younger people were especially unclear about coinsurance, with 41% saying they didn’t know. Women were twice as likely as men (36% to 18%) to say they didn’t know, but men (24% to 7%) were more likely to confuse coinsurance with a copayment.

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Copayment. Only slightly more than half of those surveyed correctly identified a health insurance copayment. Many respondents confused copayments with other health insurance terms, and 6% didn’t want to guess. Fewer than half of younger respondents answered the question correctly, while more than half of other age groups got it right.

Deductible. Almost half couldn’t identify a health insurance deductible. Younger respondents again were less likely to identify a deductible compared to other age groups, with only 4 in 10 answering correctly. Women picked the correct deductible definition more often than men (59% to 45%).

Health Savings Accounts. When asked what they know about HSAs, participants could choose as many responses as they believed applied. Slightly more than 40% correctly answered that an HSA lets them set aside money on a pre-tax basis to pay for qualified medical expenses or that an HSA can pay deductibles, coinsurance and copays. Other respondents seemed to confuse HSAs with flexible spending accounts.

Children on parents’ health plans. Many respondents didn’t fully understand how long they can keep children on health plans. Almost one-quarter incorrectly thought that the child still had to live at home to remain on a parent’s health insurance until they turn 26.

Special enrollment. Nearly 30% incorrectly believed that not liking a current insurance plan or getting diagnosed with a new medical condition would make someone eligible to change health insurance at any time. Gaining weight and buying a house mistakenly were chosen as qualifying open enrollment events by 11% of respondents.

Medical bills. At least 21% of people surveyed said they were confused about a medical bill they received. Men were more likely than women to say they were confused. Although the No Surprises Act may help people who get an unexpected bill because of an out-of-network charge, nearly 20% of Americans are struggling with paying other medical bills.

Satisfaction. Although survey respondents often are confused by medical bills and many didn’t have a full grasp on health insurance terminology, the vast majority of those surveyed said they’re happy with their health plans.