AICPA Survey: Half of U.S. Adults Lack Insurance Related Financial Literacy

The results of a survey conducted by Harris Interactive for the American Institute of CPAs (AICPA) highlight that a majority of Americans have difficulty understanding basic financial information found in health insurance plans.

Over 1,000 adults took part in the recent survey, which found that more than half of those individuals were unable to identify at least one of three basic terms in health insurance; namely, premium, deductible and copay.  Approximately 34% indicated that they thought a premium was an expense required to be paid at the time of receiving medical service or a prescription.  Over 25% indicated that they thought a copay was the cost of securing insurance.  More than 10% failed to understand that a deductible is the money one pays before an insurance company makes payments.

The survey results come at a critical time given the heightened focus among U.S. citizens on making important decisions relating to the future health care coverage.  Specifically, this lack of financial literacy in the insurance space is particularly troubling in light of the pending commencement of the Affordable Care Act.  “Obamacare,” as the Act is commonly called, requires that individuals purchase health insurance or pay a penalty starting next year.  Open enrollment under the Act begins in October.

The AICPA survey underscored the need for continued financial literacy funding and initiatives.  While the focus of the survey was on the United States, similar trends are highly visible in many other developed and developing nations.  The importance of effective and impactful financial literacy programs and services has never been greater.