Deductibles, out-of-pocket maximums, oh my! How insurance jargon stirs up fears


When word got out at my husband's office a few weeks ago that the company was changing its health insurance plan, many of his colleagues were understandably concerned. Some worried their providers would be cut of out the network or their necessary medication costs would substantially rise.

My husband and I certainly understood everyone's reactions, though we wanted to ensure we had accurate information before jumping to conclusions.

And sure enough, the fears filtering the hallways of my husband's office were unfounded. He was initially told, by several different people who said they were informed on the matter, the company was forcing all employees into a new high-deductible health plan--with a $5,000 deductible.

Gulp. So much for the happy dance I did when we first moved to California and gained some beaucoup benefits like $11 acupuncture treatments.

Even after an HR meeting explaining the new plan, several of my husband's coworkers misquoted the requirements and benefits. And these aren't uneducated folks who have little experience with the health insurance industry. Many of his colleagues have a college degree or higher and have had insurance their entire adult lives. These are consumers who know how to navigate complex concepts.

So my husband and I embarked on some simple research to ensure exactly what would be happening to our health insurance--and our costs--before we engaged in our own panic session. The company's HR department gave employees brochures and other information specifically outlining the new plan. We got to reading.

What was the real situation? It's true the company was now offering a high-deductible health plan, but that dreaded $5,000 deductible is actually the maximum family out-of-pocket limit. The difference between deductibles and out-of-pocket limits, as my dear readers surely know, is key. Yet, this is a classic example of the inherent confusion involved in understanding health insurance terms.

But it gets even better. The real deductible is actually $2,000, which the company is completely subsidizing, as long as employees undergo a health screening to ensure overall wellbeing, including healthy cholesterol and blood pressure levels.

In essence, our new health plan isn't much different from our existing one. The insurance company remains the same. The provider network is identical.

The problem here comes down to the insurance jargon that, say, 99.9 percent of the public doesn't really understand. But that's just a personal guestimate. Maybe it's higher.

If highly educated, savvy consumers misconstrue health insurance information, what chance does that rest of the population have? How can we ensure that with the shift to a business-to-consumer market consumers actually know about the plans they sign up for through health insurance exchanges? Terms like deductibles and out-of-pocket maximums aren't everyday verbiage.

I commend the insurers that have already engaged in outreach to educate the public about exchanges, health plans and all reform-related changes. But it's likely not enough. I can only hope consumers take matters into their own hands and educate themselves, reading all available materials to understand each and every term presented to them. - Dina (@HealthPayer)