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Health Reform 101

Anne-Allen_White-Bckgrnd_WEBAmericans have heard they’re paying an arm and a leg for health insurance, and they generally know something called Obamacare is looming in the very near future, poised to change the way health insurance is administered.

But for many, that’s about as far as the knowledge goes. It turns out that only half the adults in the country have even a basic knowledge of health insurance terms. An August phone survey of 1,000 adults, conducted for the American Institute of CPAs by Harris Interactive, found that 51 percent couldn’t accurately identify the terms premium, deductible and copay.

Thirty-four percent thought a premium was an expense that you pay when you receive medical services or a prescription. Twenty-seven percent thought a copay was the cost of obtaining insurance. And 12 percent didn’t know a deductible is the money you have to pay before the insurance company starts to pay up.

Granted, the U.S. has an estimated 45 million uninsured people who can be forgiven for failing to understand the terms of a program in which they do not participate. But even they should know what a deductible is, because most probably have paid car insurance at some point, and the ever-popular deductible is almost as classic a feature as the chrome steering wheel.

It’s important to understand health insurance, because it’s costing Idaho employers a great deal of money to provide it. Employees end up paying a large share of the costs as well. And this need for understanding will only grow as more people become enrolled in insurance plans through the Patient Protection and Affordable Care Act.

Many of those people work in Idaho companies. In the same Harris survey, 41 percent of the respondents said they know little about the law behind the attempt at federal health care reform. Another 48 percent said they were somewhat knowledgeable. Younger people tended to report the least amount of knowledge; half of the adults ages 18 to 34 said they know nothing about the law at all.

If this sounds like your workers, you should clue them in. Of course, many people are understandably loath to read the thick packet of information that comes with their health plan. Luckily, there’s a veritable army of people who actually like decoding the fine print. In fact, there’s a National CPA Financial Literacy Commission set up for this very purpose. Idaho’s own Blue Cross has a program and website called Get Covered Idaho set up for this reason too. National groups like American Health Insurance Plans also have free informational materials on their websites.

Starting in October, employers will be required to provide written notice to workers of the new state health care exchange, and how to get in touch with it.

There’s a lot of basic information well worth finding out. For example, many preventive care services will be free under the new federal law. And nonsmokers will be eligible for lower insurance rates. As for the numbers, local CPAs have plenty of tips you can pass along to your workers.

Big companies with good human resources offices are probably providing the kind of information their workers need. A good insurance broker can do the same thing. But if you don’t have access to either of those, try tapping some of the free resources to help your employees get the information they need. It could save everyone a lot of time and money.

Anne Wallace Allen is managing editor of the Idaho Business Review.

About Anne Wallace Allen

Anne Wallace Allen is the editor of the Idaho Business Review.