An incredible amount of change and uncertainty has shaken the insurance industry. To nobody’s surprise, the change has been good for some, and not so good for others. Nonetheless, through all of this change I think much has been lost on the insured — the actual employee or contractor who simply wants to know what their best options are this next year. Rightfully so.
Many employers and brokers are distracted with these changes in regulations, looking for the place to cross their T’s and dot their I’s, but many forget the basic message of insurance remains the same for the end user, the insured.
It is our responsibility as insurance professionals and/or employers selecting our insurance products and plans for our employees to remember that most Americans still don’t know the difference between the very basics of insurance: deductibles, copays, coinsurance and max-out-of-pocket.
I’ve spoken with many employers who can’t entirely explain how all of these work together, yet they are the ones selecting the plans. In fact, according to a Washington Post study, only 14% of Americans could accurately identify what each of the following four terms meant: deductible, copay, coinsurance and max-out-of-pocket. Are you surprised? I’m not, mostly because I get these questions every day. Understanding the importance of the new changes in the Affordable Care Act is critical, but doing this at the expense of ensuring your employees and customers know the basics is negligent.
Almost every day I speak with someone about the basics, and I often put it in layman’s terms and try to over-simply it. The other day I told a small business owner that the deductible was their initial financial commitment before the coinsurance kick in. I continued, the insurance company is saying, “Hey, for the amount of risk (monthly premium) we are getting from you (the insured), we expect you to pay this deductible before we take care of a large percentage (coinsurance) of the rest of it.” I further explained that the max-out-of-pocket was the ceiling that once the insured hit that number, then they can expect not to pay any more that policy year.
Now I know this seems like basic stuff for you and I, but for many of your clients’ employees — and I mean a lot of them — they really don’t know how it all works. They simply look at the few plans they are offered, and if they aren’t sure they ask their spouse or their co-worker and hope they feel good about their decision. When you are trying to keep your renewal rates low, employees picking the wrong plan when they are under-educated is not going to help.
So what do we do? Keep your eyes on the turbulent tides of the ACA, but don’t forget that nearly 86% don’t get how this works and it’s important that what you’re offering is understood. Take it upon yourself or find a partner that can help you better help the confused insured.
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