Open enrollment for many employers is in full-swing and open enrollment for individuals in the Affordable Care Act-created marketplaces kicks off this Saturday, yet many consumers continue to be baffled by the complexity of health insurance. With more and more health care decisions being made by confused consumers, some say the role of the benefit adviser is more imperative than ever; and open enrollment is a crucial time for them to educate their clients about health insurance.

For example, nearly 40% of uninsured consumers don’t understand basic health insurance terminology and even fewer understand how to calculate the out-of-pocket costs of a hospital stay or out-of-network lab test, according to a new Kaiser Foundation survey, which illustrates a disquieting need for more consumer education. 

“There will never be a time where the broker or benefit adviser is needed more than right now,” says David Mordo, vice president of education and compliance at Fair Haven, N.J.-based Welsh Benefits. “It is alarming that the normal consumer does not have the grasp of some of the most basic terminology concerning their health insurance plan, but it’s not surprising.”

“I don’t know some of the terminology that goes with being a defense contractor, a plumber, or a brain surgeon,” he adds. “Deductible, coinsurance, maximum out-of-pocket, copays, second surgical opinion, these are terms that we hear every day, but we have to spend a little more time now explaining, re-explaining and educating the consumer. That’s what we’re supposed to do. That’s the job.”

When asked a series of questions about health insurance terms and concepts, including some that require calculating out-of-pocket costs, the Kaiser survey found that over half of the public (52%) gave at least seven out of 10 right answers, but only 4% answered all 10 questions correctly. And more than a quarter of respondents (28%) gave correct answers to four or fewer questions, with a surprising 8% giving no correct answers at all.

Confusing concepts

Consumers had a particularly difficult time understanding some basic insurance concepts and calculating their out-of-pocket costs in different scenarios. Nearly half (49%) of respondents were unable to correctly calculate how much they would have to pay for a four-day hospital stay with a $1,000 deductible and $250-per-day copay. And only 16% could correctly calculate how much they would have to pay for an out-of-network lab test.

The survey found that the majority of Americans are confused about the term “health insurance formulary,” with only a third (33%) identifying the correct definition (a list of prescription drugs covered by a health plan). Another 14% selected an incorrect definition of formulary, and over half (53%) said they didn’t know what a formulary is.

Another area where the survey identified gaps in awareness centered around in-network and out-of-network provider care. Less than half (41%) of consumers said they are aware that doctors providing care at an in-network hospital may not necessarily be in-network providers themselves, while about three in 10 incorrectly believe that all care received at an in-network hospital will be from in-network doctors. Another three in 10 respondents said they simply don’t know.

Need for continuing education

“Anybody that has the title of benefit adviser, broker, or general agent, has to be ready to educate constantly,” says Mordo. “It’s not one and done. We have never been more vital to the equation than right now. The consumer can make a valiant attempt to do the right thing and even in the most valiant attempts they are going to come up short. We have to be on the front lines.”

The most opportune time to educate employers and employees about the health insurance terms and concepts, he says, is during open enrollment.

“Open enrollment is a time once a year to re-educate the employee. You can do so with a series of handouts, such as literature about the plan design,” he says.

By law, employees must receive a summary of benefit coverages; another tool Mordo says benefit advisers can use to educate clients.

“While it looks to be a cumbersome nine-page document, it does have the explanations of some of this terminology. There is a glossary on the last page. Let’s take a little time and teach some of the terms to the folks,” he says.

Advisers typically like to hold question-and-answer sessions at the end of benefit presentations during open enrollment meetings, Mordo says, but suggests that instead of holding Q&As at the end, advisers might want to do so at the beginning of the presentation.

“I like to do Q&As at the beginning. I say, ‘Tell me what concerns you.’ Then I’ll get to my speech,’” Mordo says, adding, “Usually I rarely get to my speech. But that’s OK, because I’m more concerned with what’s perplexing them.”

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