New form simplifies health insurance
By Kathleen Sebelius
September 24, 2012
As we near open enrollment season for many health plans, Americans have an important new tool to help them pick the right coverage thanks to the Affordable Care Act. Consumers can now get a simple, standardized form telling them what a given health plan covers and how much it costs. As a result, comparing health insurance options to find the best one for your family has never been easier.
The new form, known as the "Summary of Benefits and Coverage," contains the key information you need to make your health insurance choice: the deductible, the co-pays, coverage for specialists and prescriptions drugs and more. And it lays out all these facts in a short, readable table, not dozens of pages of fine print and footnotes.
The forms are also standardized, which means that even if you and your spouse have different employers and plan options, you'll still be able to make an apples-to-apples comparison.
This is the kind of basic information we take for granted when making most purchases. Many of us would never buy a computer or a car without knowing how the details compared to other models. And yet as a former insurance commissioner, I know that when it comes to health insurance, a far more important and personal choice, consumers were often in the dark.
In the past, just finding out what your plan covered could mean making several calls to the insurance company and you might get a different answer every time. You could request a copy of the contract. But even if you got it, which was far from guaranteed, you might still have to search through as many as 100 pages of fine print to try to answer your question.
Getting this basic information took so much work that many busy Americans were forced to take their chances, buying a policy without all the facts and hoping it met their needs. In the most tragic cases, they only found out the truth about the gaps in their coverage after their insurance company had denied their claims and the bill arrived.
The new consumer form will help make sure that doesn't happen. It works similarly to the nutrition facts label on groceries, making key information, like whether the plan covers the rehabilitation necessary to get back to full strength after a heart attack or stroke, available at a glance.
With health insurance plans, these details are critical. If your daughter has a severe blood disease, the difference between a plan that covers her medications and one that doesn't could be thousands of dollars a year in out of pocket costs. The Summary of Benefits and Coverage ensures that you have this information when make your decision — and puts it in a clear format that you don't have to be a lawyer or insurance salesman to understand.
That's what the Summary of Benefits and Coverage means for consumers. But the form will also have an impact on the behavior of insurance companies. Once you know that consumers can easily compare the benefits and costs of different plans, it's hard to get their business without offering better benefits or lower costs.
This is how markets usually work. Companies know that consumers have a wide range of options, so they continuously compete to improve their products, and consumers reap the benefits. Now, the health insurance market will start working for consumers too.
There are a few ways to get a copy of the Summary of Benefits and Coverage. If you buy your own coverage, you may be able to get a copy at healthcare.gov. And you can also request a copy at any time from the insurance company that offers the plan. If you get coverage through your job, the form will be provided automatically during your open enrollment period. Otherwise, it will become available when your plan renews.
Choosing a health plan is one of the biggest decisions any of us make. Starting today, that decision will be a lot easier.
Kathleen Sebelius is the U.S. Secretary of Health and Human Services.