Americans may know a lot of things, but health insurance isn't one of them. In fact, 8 out of 10 Americans failed a quiz on health insurance basics given by Windsor, Connecticut-based research firm LIMRA in 2013.
A lot of people have misperceptions about health insurance in general, says Sophie Stern, deputy director of the Best Practices Institute for Enroll America, an organization that helps Americans enroll in health insurance plans.
Want to know if you're one of them? Here are some common health insurance myths and the facts that prove them wrong.
Myth 1: You don't get any health care services until you pay your deductible.
Fact: Auto and home insurance policies require policyholders to pay their deductibles before they'll pay a claim. For example, if you have a $500 deductible on your home insurance policy, you'd have to pay the first $500 in tornado damage before your insurer would pay the rest.
However, health insurance works a little differently. While it's true you do have to pay your health insurance deductible before your health insurer will pay for many services, most plans give you free access to preventive services even if you haven't met your deductible.
Screenings for blood pressure, cholesterol and HIV as well as women’s health services and certain immunizations are among the free services that must be provided under the Affordable Care Act (ACA).
Myth 2: Health insurance premiums are unaffordable.
Fact: Many people fail to adequately explore their health insurance coverage options "because they don't think that affordable options exist," Stern says.
However, under the ACA, consumers who earn less than 400 percent of the federal poverty income level qualify for a subsidy. In 2015, 400 percent of the federal poverty level is $46,680 for an individual and $95,400 for a family of four.
People who can't afford high insurance premiums may qualify for Medicaid, a government program that provides free or low-cost health insurance. The ACA includes a provision allowing states to choose to expand their Medicaid coverage to cover those who earn less than 138 percent of the federal poverty level -- $16,243 for an individual and $33,465 for a family of four
However, 22 states chose not to expand Medicaid coverage, as of March 2015. In those states, the median income for a family of three that’s eligible for Medicaid is $8,840 per year, according to the Henry J. Kaiser Family Foundation.
According to the Department of Health & Human Services, nearly 80 percent of Americans who applied for Obamacare through the federal health insurance marketplace between Nov. 15, 2014, and Jan. 30, 2015, qualified for a plan that cost $100 or less per month once subsidies were applied.
Myth 3: You could pay huge amounts out of pocket.
Fact: When it comes to health insurance, it's true that many people must pay more than just their premiums.
- A deductible is an amount that resets each year that you must pay out of pocket before your health insurer pays for services.
- A copayment is a fixed amount you pay for a health service at the time you receive the service.
- Co-insurance is a percentage of the costs you pay for any health services that are received.
However, for plans that are in the health insurance marketplace, the ACA does place a cap on out-of-pocket costs for which you will be responsible. In 2015, the maximum amount of out-of-pocket costs is $6,600 for an individual plan and $13,200 for a family plan. Once your out-of-pocket maximum is reached, your insurer has to pay the rest.
Myth 4: Your insurance covers you wherever you get services.
Fact: You may do your research and find the best doctor available to treat a particular medical condition, but that doesn't mean your insurance will pay for it.
Most health plans encourage policyholders to use medical providers in a certain network. However, some, such as preferred provider organizations (PPOs), will let policyholders pay more to visit out-of-network providers.
Other types of health insurance plans such as exclusive provider organizations (EPOs) won’t pay for services outside of the network at all.
Confusingly, your insurance carrier may even have different networks of doctors for different plans, points out Kris Conway, an independent agent with brokerage Health Insurance Advocates.
So even if you and your neighbor both have insurance plans with the same insurer, you may not have access to the same physicians or specialists.
Myth 5: Your health insurance won't cover any treatment resulting from injuries caused by dangerous hobbies such as rock climbing or scuba diving.
Fact: Health insurance will cover treatment as specified in your plan regardless of how the injuries are sustained.
However, your health insurance plan may have exclusions, which are services that aren't covered. For example, your health insurer may not cover infertility treatments or certain immunizations that you need if you travel for work.
For example, if you travel to Saudi Arabia, the Centers for Disease Control and Prevention recommends that you are vaccinated for polio and Hepatitis A.
Exclusions should be listed explicitly in your policy, so you know in advance if there are any instances in which your insurer won't pay.
Myth 6: All plans offered by a certain provider are the same.
Fact: Providers typically offer a variety of plans at varying price points. Some plans cost more and give you access to more services than others.
There are also differences between individual plans and employer-sponsored plans. In some cases, employers will pay for additional services that an individual plan may not have.
Even if you're happy with your insurance provider, make sure the plan you choose is the right one for you. Insurers add new plans every year, Stern says.