Obamacare: Your guide to health insurance terms

Many people don't know common Insurance terms. Patients' uncertainty about insurance language can cost them.

Story highlights

  • In a recent survey only 14% knew common insurance terms
  • Only 11% could calculate the cost of a hospital stay given a hypothetical plan
  • Not knowing what terms mean can be costly
If you don't know what all those health insurance buzz-words like "co-pay" and "premium" mean, you're not alone. Most Americans probably don't understand all the basic health care terminology, which could be a serious disadvantage when choosing a plan during open enrollment.
A recent study in the Journal of Health Economics found only 14% of those polled could identify basic health insurance terms. Only 11% of those surveyed could calculate the price of a four-day hospital visit when given a hypothetical plan.
The people surveyed all had health insurance. Presumably they had some familiarity with the terms, or thought they understood their insurance.
Now imagine what could happen when the 48 million uninsured Americans -- many of whom have never had any experience with health insurance -- are confronted with having to choose a plan to meet the requirements of Obamacare next year.
"Insurance is fundamentally complicated," said George Loewenstein, a professor of economics and psychology at Carnegie Mellon University and a co-author of the study. "I have a Ph.D. in economics and I consult with insurance companies, but there are elements I can't understand, so it didn't surprise when I saw the average person struggle with these terms."
Not knowing these terms can be expensive.
"We know from other research that people make disastrously bad insurance choices because they don't understand this basic language," Loewenstein said. "I seriously hope people will ask for help and can find good advice on finding the plan that is right for them."
Here are some terms you may want to learn before you dive into a decision about your health insurance for next year. This information is compiled from the Health and Human Services and Employee Benefits Security Administration's guidance on terms.
1. Deductible
The amount you owe before your health insurance benefits kick in. For example, if your deductible is $500, your insurance won't pay for anything until your costs are more than $500.
2. Co-pay
A co-payment, or co-pay, is the amount the insured person pays every time he or she receives a health service. For instance, if your co-pay to see a doctor is $25, you pay that amount each time you see him or her. The insurance takes care of the rest.
3. Co-insurance
Your part of the costs of a health service