Puzzled by your policy? New rules will require insurers to use plain English

Marcus Pickett

It’s vital to regularly review your health coverage, compare it with the bills your doctor sends and make sure your insurance company is paying what it should. But how can you do that if you can’t understand your policy in the first place? Health insurance policy documents are not known for being easy reading.

But that could soon change. In the summer of 2011, the U.S. Department of Health and Human Services announced new rules for health insurance companies to follow. The new rules, which are expected to go into effect in 2012, will require insurers to simplify the language they use, define health insurance jargon and present everything in an easy-to-read format.

Puzzled by your policy? New rules will require insurers to use plain English
Puzzled by your policy? New rules will require insurers to use plain English

Benefits in plain English

The first rule is that policies must be written in plain English. Consumers no longer will have to wade through dozens of pages of technical jargon and inaccessible legalese. However, the complexities of health insurance policies designed for niche markets and personalized consumer needs can’t always be conveyed in plain English. For this reason, the new clarity rules also establish a uniform glossary of terms (like “deductible” and “co-pay”) that consumers can refer to as necessary.

According to the Department of Health and Human Services, this glossary must be readily accessible. Insurance companies and group health plans must provide it to any enrollees who ask. The glossary also will be posted at www.HealthCare.gov and www.dol.gov/ebsa/healthreform.

Consistency for comparison shopping 

Along with plain-English policies, health insurers also must abide by new consistency standards that enable much easier comparison shopping. To accomplish this, insurers will be required to publish what’s called a “Summary of Benefits and Coverage.” The Department of Health and Human Services compares this summary to the “Nutrition Facts” label on food packages.

This summary would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios: having a baby, treating breast cancer and managing diabetes. Additional or substitute examples may be used in the future.

Sample template

While the required information has yet to be finalized, the Department of Health and Human Services has published a proposed template for public comment. The template begins with a chart that answers common questions from consumers:

  • What is the premium?
  • What is the overall deductible?
  • Are there other deductibles for specific services?
  • Is there an out-of-pocket limit on expenses?
  • What is not included in the out-of-pocket limit?
  • Is there an overall annual limit on what the insurer pays?
  • Does this plan use a network of providers?
  • Do I need a referral to see a specialist?
  • Are there services this plan doesn’t cover?

Next come a variety of charts that outline the costs associated with things like office visits, trips to the hospital, outpatient care and mental health treatments.

Health insurance exchanges

These new clarity rules will work in tandem with the upcoming health insurance exchanges. The exchanges, which are scheduled to open in 2014, will allow consumers to shop for coverage sanctioned by their state; they’ll also include group health insurance plans for small businesses. The new clarity requirements, the Department of Health and Human Services hopes, will help the influx of new insurance shoppers know at a glance what they’re buying.

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