Consumers have difficulty defining some of the common terms used by health plans, brokers and health insurance industry insiders. We asked consumers to define four common terms used to define most health plans: deductible, coinsurance, copayments and maximum out-of-pocket limit.
Deductible
Consumers had varying levels of difficulty with these terms.  Two-thirds of the most engaged consumers correctly identified the definition of deductible while only 51% of the most disengaged consumers did so (and 15% of them could not even venture to guess what the term means).
Coinsurance
One-quarter of consumers said they have no idea what the term “coinsurance” means.  Only 27% correctly identified the definition amongst three unrelated alternatives (i.e. The percentage of costs you are responsible for when receiving certain medical services).  Even the most engaged consumers were confused by the “coinsurance” term, with only 38% of them selecting the correct definition and 19% saying they don’t know the answer.  Over 39% of the least engaged consumers were unable to provide a response to this question and only 26% of them selected the appropriate definition from three alternatives.
Copayment
Almost two-thirds of engaged consumers knew the definition of “copayment” compared to only 52% of the least engaged consumers.  Unlike with the terms deductible and coinsurance, the most frequent health care users (i.e. those with chronic conditions and those with several physician visits in the past year) and obese consumers are significantly more likely than their counterparts to understand what a copayment is.
Maximum out-of-pocket limit
For “maximum out-of-pocket limit”, we provided three definitions that all apply to this term, so the most appropriate response was “all of the above.”  Only 25% of consumers selected “all of the above”, but 43% did select the more common definition for out-of-pocket limits (e.g. The maximum amount of money you will have to pay in a given year for medical services).  Over 20% of disengaged consumers could not respond to this question, but 49% selected the most common definition and 21% selected “all of the above.”  Two-thirds of engaged consumers mentioned “all of the above” (34%) or the most common response (32%).
We will continue monitoring some of these terms to see if results change, but it appears clear that even the most engaged consumers have a level of uncertainty or lack of familiarity with some of the most common health insurance benefit terms.