If you've ever felt that trying to read your health insurance policy is like deciphering gobbledygook, you're not alone. DALBAR, Inc., a Boston-based company that evaluates customer-service experiences for the financial services industry, has evaluated 34 leading insurance companies (including the federally funded Medicare program) and found that most of them fail to explain benefits well to their clients.
The company recently released of its first-ever national evaluation of health insurance communications, the Explanation of Benefits (EOBs). The evaluation found 68 percent of EOBs received failing grades. Medicare's communication was among the failures, scoring below the industry standard. The company believes that this failure rate helps explain why health care costs continue to rise with little resistance on the part of consumers: People just don't know what they are buying!
Here are some of the key findings: • Nearly seven out of 10 insurers failed to produce EOBs that provide a basic level of understandability. • Only 9 percent of insurers (3 out of 34) received a DALBAR's designation of "Excellent" for the clarity, content and design of their EOBs. • Less than a third of the EOBs evaluated received the minimum designation of "Good" or higher. • Only three firms included any charts and graphics in their EOBs to help consumers understand how their benefits work. • Many important sections in EOBs take the form of supplemental notes that are often written in esoteric language and placed far away from the information to which they apply. These notes often contain the most important elements of the EOB – i.e., the "explanations." • The majority of EOBs fail to clearly answer the following most basic consumer questions: How much, if anything, do I owe? What action should I take now? What do I do with this document? I'm not surprised. Even though I write about the insurance industry, I still often find it hard to understand my own health insurance benefits. Can you read your policy?