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If you struggle to understand your health insurance, you're not alone

April 19, 2017—Here's something that many people probably won't find surprising: People have a hard time understanding their health insurance.

A survey of more than 500 adults in Connecticut who were enrolled in a state-qualified health plan found that only 8 out of 13 basic questions about insurance were answered correctly. One in 5 people did not understand the meaning of the word premium. And two-thirds couldn't figure out how much they would owe on a hospital bill when a deductible and co-pay were included.

The survey was conducted by researchers at the University of Connecticut. It found wide disparities between ethnic and racial groups in understanding insurance terms. People with higher education also were able to translate a hospital bill more easily than those with less education. Still, there were significant problems with health literacy across the board.

The study's authors wondered how people could be expected to correctly use their insurance benefits if they weren't able to understand them. The authors urged an aggressive educational campaign as well as simpler, user-friendly insurance plans.

Health insurance terms you should know

Here are some of the important insurance terms you should know, as cited by the study:

• Co-insurance. Your share of costs for a covered service. Co-insurance is usually a percentage.

• Co-pay. The amount you may have to pay at the time you get a service, like a doctor's visit or a lab test. A co-pay is usually a set dollar amount.

• Deductible. The amount you owe for health services before your insurance begins to pay anything.

• Explanation of benefits (or EOB). A summary of healthcare charges that your insurance sends you after seeing a provider or receiving a service. It's not a bill. It lists the services you received and how much your provider charged your health plan for them. If you owe money for your care, you'll get a bill from your provider.

• Formulary. A list of drugs your health plan covers.

• Network. The facilities, providers and suppliers your health insurer has contracted with to provide health services. Using in-network providers is usually cheaper than going to out-of-network doctors or hospitals.

• Out-of-pocket maximum. The most you will pay in a year before your health plan starts to pay 100 percent of your covered services.

• Premium. How much you pay for your health plan. You and/or your employer usually pay premiums monthly, quarterly or yearly. If your premium isn't paid, you may lose your coverage.

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