Health Insurance Policies to Include Plain English Summaries

On February 9, 2012, the Obama administration announced that private health insurance plans will now have to produce a clearly worded summary for consumers of exactly what the policy covers along with concise deals on all costs like deductibles and copays. The summary must be no longer than six pages in length and contain no fine print.

Benefits Summary Akin to Nutritional Labels

Likening the Summary of Benefits and Coverage form to nutritional labels on food products, the administration said the provided information will not include data on premiums, which will be available elsewhere, but will otherwise be a valuable resource for insurance policy holders to derive the full benefit of the coverage for which they are paying. A common complaint is that health care policies are so confusing, and the policy language is so difficult, consumers often pay too much or do not get benefits to which they are entitled.

Medicare Chief Marilyn Tavenner, who is in charge of spearheading the implementation of the 2010 Patient Protection and Affordable Care Act for the administration said, “These documents will allow consumers to compare plans on an apples-apples basis.”

“For too many Americans today, choosing a health plan means reading through a human resources book usually the size of a small phone book, and important information about eligibility and benefits is often buried in the fine print,” said Tavenner. “With these new rules, we’re making it easier for consumers to find the plan that is right for them.”

Summaries Will Be Available This Fall

The summaries will begin to appear with insurance policies offered this fall during the open enrollment period since the provision in the health care law direction their including becomes effective on September 23. The requirement applies to all private insurance including individually purchased employer coverage. The change will affect approximately 150 million Americans.

The complete overhaul of the health care system is a divisive one with Americans, especially in the 2012 election year. The proposed requirement, for instance, for all citizens to carry health insurance by 2014 is greatly disliked and its constitutionality will be reviewed by the Supreme Court in March. Conversely, this provision, for simplified benefits explanations, is viewed favorably by 84% of consumers surveyed.

Forms will Facilitate Comparison Shopping

In particular the summaries should be useful to consumers shopping for new coverage since they will have a standardized means of side-by-side comparison. Although many employers currently give out these kinds of documents when workers join health plans, the government versions will include “coverage examples.” These sections will provide cost estimate scenarios for a common condition, for instance diabetes, in a typical individual. In the future, as many as six of these examples may be included in the summary forms.

Both insurers and employers have complained that generating this paper summaries will add substantially to their costs. The administration will allow for compliance with an online version, but consumers must be given instructions on how to receive a paper copy and those requests must be promptly fulfilled.