What is Health Insurance Literacy?

Are you health insurance literate?  People’s literacy lies on a spectrum of knowledge with the majority skewed to the least literate side.

Do you have the knowledge, ability and confidence to find and evaluate information about health plans, select the best plan for your own (or family’s) financial and health circumstances, and use the plan once enrolled?

There is common agreement by scholars, researchers and benefit industry professionals upon this definition, but what does this truly mean for the individual who has health care needs?  Following summarizes the key behaviors of a highly health insurance literate consumer:

  • Able to compare the key features of several health plans; understand the scope of covered services and the cost-sharing provisions associated with broad categories of services;
  • Assess the adequacy and fit of the provider network of his or her (or family’s) health and financial circumstances;
  • Assess the quality of each plan in terms of measures that are important to him or her, such as processing claims or customer services;
  • Understand Explanation of Benefits (EOB);
  • Understand his or her appeal rights; and
  • Know where to turn for more information and help

Additionally, knowing how to find a doctor, fill a prescription, how to use and pay for that medication, and understanding the health provider’s explanations are all essential measures of health literacy. 

Translating these concepts into behaviors that yield positive results is challenging enough without the healthcare system presenting unexpected obstacles.  In the end, we want our health insurance to cover the health services we receive and according to the plan design we pay for.  Low levels of health insurance literacy can result in unexpected and higher out-of-pocket costs, or the delay or avoidance of healthcare altogether.

Consumers must embrace their individual responsibility to make independent informed healthcare decisions. Stepping up their game and becoming more health insurance literate will improve their financial and healthcare outcomes.

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