Quick Look: Health insurance is complex. Between all the jargon and acronyms, it can become overwhelming for the everyday employee who simply wants to know if their treatment is covered. On the surface, most people claim they’re satisfied with their health insurance, though a recent Forbes Advisor survey reveals many do not fully understand their benefits. PEO brokers can ease the disconnect leaving SMBs in the dark and start to shed light on where the value of their healthcare plans lies.
Complacency is often disguised as satisfaction when it comes to appreciating the full scope of healthcare coverage. The 2022 Forbes Advisor survey reveals many Americans remain unsure about plan definitions, medical bill discrepancies, and even when they’re health insurance-eligible. Here, we break down the survey results and highlight common healthcare misconceptions.
The annual open enrollment period is when all qualified employees can enroll in or switch health insurance benefits. Certain life events, such as a new job, having a baby, or getting married, could trigger a special enrollment period. However, nearly 30% of survey respondents incorrectly assumed not liking their current insurance plan or getting diagnosed with a new medical condition makes them automatically qualified to change health insurance outside these enrollment periods, which isn’t the case.
Misunderstandings about this type of basic information can often leave people unprotected, not knowing there are certain restrictions to accessibility. As a professional employer organization (PEO) broker, guiding small- and medium-sized business (SMB) clients through health coverage questions and common misconceptions can help them feel more confident in their choices. Here are other areas the survey highlights where people have lingering uncertainty regarding their health care.
Definition of a Deductible
A deductible is one of the primary terms listed in health plan summaries. It is the amount a health plan member pays for (plan-approved) medical care before the insurance company begins coverage. Yet, nearly half of those surveyed (45%) didn’t know the definition. 16% of respondents confused the term with a copayment, and 12% defined it as the percentage of what the health insurance plan pays versus what they’re responsible for paying.
Confusion Between Coinsurance and Copayment
77% of people surveyed also misunderstood the definition of coinsurance. 30% of respondents didn’t know what it meant and nearly one-third didn’t even want to guess. Additionally, 24% of men and 7% of women confused the term with a copayment. Coinsurance is the portion of the medical bill a plan member splits with the insurance company. Whereas, a copayment is a flat fee paid every time an employee receives health services included in their plan, such as a visit to a primary care physician.
Most coinsurance reflects a 20/80 split with the health plan member responsible for 20% and the insurer responsible for the rest. However, there are two caveats in place. First, the health plan member must first reach their deductible, and second, the insurer will cover the bill for the 80% only until the member reaches the plan’s out-of-pocket maximum.
Understanding HSAs Compared to FSAs
In addition to the confusion surrounding insurance terms, there are also several acronyms, including HSAs and FSAs, people recognize but aren’t quite sure what they entail. An HSA is a health savings account allowing employees to save for healthcare costs tax-free. This option is available only to those enrolled in a high-deductible health plan, or HDHP, and SMBs can opt to make HSA contributions as part of a comprehensive benefits package.
Per the Forbes Advisor survey, more than 40% correctly identified the definition of an HSA and understood it can pay deductibles, coinsurance, and copays. Yet, some respondents were unsure of the difference between an HSA and an FSA, or a flexible spending account. Their impression was an HSA could be set up as part of any health plan, and HSA money is lost if not used within the year, terms which apply only to an FSA.
Lack of Clarity Regarding Medical Bills
Translating medical bill charges is a constant concern. There can be a long stretch of time between when a person enrolls in an insurance plan and when it needs to be put into effect. Therefore, when medical bills are due, it can be difficult to comprehend what’s been covered under insurance and what’s left to be paid for out-of-pocket.
Nearly one-third of respondents (32%) said they paid a medical bill but were confused about why the services were not covered under their health insurance plan. 26% were confused about the services they were being charged for, and 21% said they were confused about whether the medical bill was for treatment or a copay.
This leaves some wary of what their health insurance plans are actually worth, and higher-than-expected bills leave 19% of respondents unable to pay. Hopefully, with new legislation in place, surprise medical bills will be fewer and far between. It protects plan holders from excessive costs when receiving emergency care, non-emergency care from out-of-network providers at in-network facilities, as well as air ambulance services from out-of-network providers.
Leveraging the Support of a PEO Partner
A well-informed workforce results in more value-based decisions for SMB leaders and their employees. A PEO like ExtensisHR has in-house experts to answer benefit-related questions, manage benefits administration, make necessary plan changes, and maintain compliance. These experts can also support brokers by sharing benefits knowledge to SMBs year-round. Communication methods may include webinars, online portals, and in-person knowledge shares. This provides answers to frequently asked questions and encourages ongoing engagement in an inclusive way.
Healthcare benefits are one of the most attractive parts of a compensation package. Without the buy-in of employees, it leaves SMBs in a less-than-desirable position when it comes to retention and recruitment. Brokers can allocate resources and extend their services with the help of a PEO as a competitive advantage benefiting all.
In addition to handling the administration of all things HR, ExtensisHR focuses on a customer-centric model to ensure employees feel the value of their workplace. With a solution driven by cutting-edge technology, tailored services, and a people-first experience, you can give your clients what they need to grow. Contact the experts at ExtensisHR today.