Quick! What's a health insurance deductible?

By , Posted on 16 July 2013

health insurance basicsVery few people understand how health insurance plans work, as 80 percent of consumers failed a quiz on coverage basics, according to LIMRA, an insurance trade organization.

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LIMRA asked 2,000 people to take a 10-question "true or false" test on health insurance fundamentals. The results were dismal:

  • Nearly 8 in 10 consumers failed the test — answering five or fewer questions correctly
  • Only 1 in 10 consumers correctly answered at least seven questions
  • Uninsured consumers, on average, answered less than 3 in 10 questions correctly 

Survey results revealed that many people were ignorant about plan features, the costs involved and how various types of plans work.

For instance, only 15 percent knew that this statement is false:

The deductible is the amount you pay out of your own pocket for health care for each visit before the insurance company or health plan pays the rest of the costs.

While your deductible is paid out-of-pocket, it's the fixed amount you pay during your benefit period, typically a year, before the health plan kicks in to pay for services.

Results weren't much better when it came to understanding how health insurance exchanges, or online marketplaces, will work. The exchanges are a key provision of the health reform, and are designed to offer uninsured individuals and small businesses a competitive and affordable way to buy coverage. The exchanges are slated to open Oct. 1, so people can purchase health insurance plans that will go into effect Jan. 1, 2014. Those who qualify, may receive subsidies from the federal government in the form of tax credits to help pay for the plans.

The study found that just 14 percent understand how the public health exchanges will work. For uninsured consumers — who are most likely to use these exchanges — less than 1 in 10 know what types of plans will be available.

No one surveyed answered all 10 questions correctly, but before you get all judge-y, take the health insurance quiz yourself and compare your results.

Related articles:

Health insurance marketplaces: How do they operate and who do they benefit?

Health reform sticks: Now what?

Income, insurance status rules relaxed for health exchanges

Key health reform provision delayed until 2015

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Des Toups

Des Toups

Managing editor

Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's.

Email: dtoups@quinstreet.com

Follow him on Twitter @destoups

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