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Confusion over health plans stymies consumers

/ Source: The Associated Press

Millions of people are receiving letters in the mail this month notifying them of the open enrollment period for their health care plans — the period when they can change their coverage for next year if they act by a certain deadline. And that deadline might be one of the few things in the letter that is easy to understand.

The issue of "health literacy" has been getting some attention in the insurance and health care fields, but has largely flown under the radar outside those specialized groups. Yet without a clear understanding of the terms that are used, consumers are in many cases left guessing about what types of coverage or features they have available, and which plans might be the best choices for them.

So far, the effort to improve the way health information is presented has focused mostly on actual health care delivery, for instance making sure that people with a chronic condition understand what they need to do to manage it. But recognition of the need to better educate consumers is spreading to health insurance and benefits arena as well, said Susan Pisano, a vice president with America's Health Insurance Plans, an industry group.

"It is a movement that is more or less in its infancy," she said. "It's gaining momentum and there is a serious commitment on the part of hospitals, insurers and others, to make information clearer and easier to act on."

If you've received information about open enrollment that isn't clear or doesn't answer all your questions, there are a number of sources you can turn to for help. One place to start would be your health insurance company's Web site, where you can often find guides aimed at helping plan members navigate the jargon in order to make better decisions.

For broader information, you can look to a number of other resources online. America's Health Insurance Plans and the federal government's Agency for Healthcare Research and Quality put together a consumer guide to health insurance that details the different types of insurance available and how they work. "Questions and Answers about Health Insurance" is a 36-page guide that can be accessed on the group's Web site. Found by clicking on "Consumer Information," the guide contains details about how various plans work and a glossary of insurance and health care terms.

A similar effort prepared from the consumer perspective, "The Managed Care Answer Guide," can be found on the Web site of the Patient Advocate Foundation by clicking "PAF Publications" on the home page.

Judith Stein, executive director of the nonprofit Center for Medicare Advocacy, said seniors using the government program need to make sure they understand their choices, especially for Medicare's Part D prescription drug program and for Medicare Advantage coverage, which is private insurance that takes the place of the government coverage.

"People need to make a choice every year because the plan they're on this year may well not be best for next year," Stein said. Moreover, different plans can cover different treatments and drugs, and need to be examined before they are picked. "You cannot just choose on the basis of premium," she said.

Medicare open enrollment runs from Nov. 15 to Dec. 31. Seniors can find information about Medicare's various plans at or by calling 1-800-MEDICARE.

There are several nonprofit organizations that also offer helpful information regarding Medicare coverage requirements and definitions, including Stein's group, which can be found online at or by calling 860-456-7790. AARP also offers an interactive tool at that helps answer questions about the government program and a separate guide to the prescription drug program under Medicare Part D.

Seniors who do not have access to the Internet should seek assistance when trying to decide, Stein said, because it can be difficult to choose without using Medicare's online plan finder.

Some of the common terms you need to know as you're choosing your health coverage are:

  • Creditable Prescription Coverage — A term used to describe third-party prescription drug coverage, typically from an employer or union, that is at least as good or better than Medicare's standard prescription coverage. Retirees or people who are old enough to qualify for Medicare may get a letter that states whether their employer's or union's plan provides creditable prescription coverage, and allows them to a choice to stay in that plan and not to enroll in the Medicare drug plan.
  • Coinsurance — A provision under which both the insured person and the insurance plan share charges for covered health care in a specified ratio, like 80 percent by the insurer and 20 percent by the individual. In many plans, coinsurance payments start after the insured person has paid their deductible, a set amount they must pay each year before insurance coverage kicks in.
  • Co-payment — The amount an insured person must pay to visit a provider or have a prescription filled. The amount, or amounts, are spelled out in an insurance plan and don't vary based on the charges, the way coinsurance does.
  • Flexible Savings or Flexible Spending Account (FSA) — A savings account established by an employer that allows someone to set aside tax-free wages to use for health care costs and dependent-care costs not covered by insurance. All funds deposited in such accounts must be used within that year or they are forfeited. Some plans extend the deadline to March of the following year.
  • Formulary — The list of drugs covered by an insurance plan.
  • Health Savings Account (HSA) — A tax-free savings account for people who have high-deductible insurance plans to help cover medical expenses. These are similar to an FSA, but can be set up by individuals or employers, and the money can roll over and accumulate over time if not spent.