More than half of people couldn’t answer ValuePenguin’s questions about health insurance

A ValuePenguin survey of over 1,000 Americans revealed the uncertainty many feel about health insurance because only 28% of people have never been confused about their coverage. But more generally, Americans have expressed uncertainty about obtaining health insurance or using their policies.

This confusion has financial consequences for policyholders – and can hamper improvements in public health. In fact, 57% said they sometimes avoided medical care because they weren’t sure if their insurance would cover the expenses. Additionally, more than a third of respondents were not sure their insurance would cover a COVID-19 test.

Main conclusions

Although they have coverage, most Americans expressed a sense of uncertainty about getting or using health insurance.

While only 13% of those polled did not have health insurance, 72% said they felt confused about buying or using health insurance – or both. However, people were generally more confident in knowing how health insurance worked than in knowing which plan to purchase. While 55% said they were unsure of which coverage to choose, 39% said they had questions about using their health insurance.

Still, some of these people may have overstated their knowledge of using health insurance because ValuePenguin asked consumers six questions covering various details of health insurance.

A number of people have been confused by questions which can be considered quite basic. For example, 55% of consumers did not know that a health insurance premium is the dollar amount you pay for coverage each month. In addition, nearly four in ten people thought they could change their health insurance plan at any time. In reality, the majority of consumers can only make changes during open registration.

But the most worrying blind spot was that 57% of those polled said they had avoided medical care in the past because they weren’t sure they would be covered by their health insurance policy. Young people were more likely to have avoided medical care because of the uncertainty, with 69% of Millennials and 64% of Gen Z admitting they chose not to seek treatment.

On average, 55% of respondents gave incorrect answers to questions about health insurance

When tallying the six questions asked by ValuePenguin, we found that 55% of people – on average – gave a given question an incorrect answer.

A question about the difference between a health savings account (HSA) and a Flexible Spending Account (FSA) gave the highest percentage of incorrect answers. About a third of people thought HSAs and FSAs were the same, while only 38% accurately identified the ownership and duration of both accounts.

While 55% of people weren’t sure what a health insurance premium was, 54% weren’t clear on another cornerstone that accompanies most types of insurance plans: deductible, which is the amount the policyholder must pay before the insurer covers the expenses.

About 24% of people mistook a deductible for a copayment – the fees that insurers charge policyholders for medical services, like doctor visits. Forty-eight percent of consumers, including the 24% who confused copayments with deductibles, could not define a copay.

Fourteen percent thought a quota was the same as a maximum disbursement, which refers to the maximum amount that policyholders can spend on medical services before their insurer covers all costs. In total, 57% in total did not know what the maximum amounts were.

Overall, women seemed to have a better understanding of health insurance than men. Men had a higher percentage of correct answers on only two of the six questions – on deductibles and the relationship between HSAs and FSAs.

In general, the older generations were more familiar with Medicare. On average, 42% of baby boomers answered a given question incorrectly. While this generation was the only one where more than half of people tended to answer correctly, the rate of incorrect answers among Gen Z and Millennials was much higher – 70% and 63%, respectively.

Americans could ease some of their financial worries about health insurance if they better understand the specifics of their policies

In the midst of the ongoing coronavirus pandemic, understanding your health insurance coverage takes on greater importance. But more than a third of people were not sure that their insurance would cover the cost of a COVID-19 test.

Considering that 57% of people avoided medical care when they weren’t sure their insurance covered a visit or procedure, it’s possible that people who aren’t sure how their insurance treats a COVID-19 test could avoid test and potentially spread the virus unknowingly.

While confusion over the specifics of health insurance reigns among most policyholders, concerns about the cost of coverage has appeared even among those who have understood their policies – and this is not limited to the coronavirus. For example:

It is possible that more people would be confident that they could cover their health insurance expenses if they were more familiar with their policies. On the other hand, concerns about costs could grow if policyholders initially confuse one component of their insurance with another, cheaper expense.

About one in ten said they had no idea what their maximum spending amount was, but almost six in ten demonstrated that they did not know what the term meant, even if they thought they knew. This dissonance shows that a lack of knowledge about the intricacies of health insurance could prevent policyholders from budgeting effectively and getting the treatment they need.

Methodology

ValuePenguin commissioned Qualtrics to conduct an online survey of 1,038 US consumers, with the sample base proportionate to represent the entire population. We have defined the generations as the following ages in 2020:

The survey was conducted from October 19 to 21, 2020.