5 Health Insurance Mistakes Costing You

Avoid paying your bills too soon and not checking your plan's medication list.

Don't just fork over your hard-earned money because you don't understand basic health insurance terms.

Health insurance is one of the pricier products you're likely to buy. It's also one of the most confusing.

Studies show that most Americans have a poor understanding of their health benefits and how they impact their ability to access and pay for medical care. A study out last year by researchers at Carnegie Mellon University found that among a group of people with work-based health insurance, just 14 percent were able to accurately define four basic health insurance terms: co-payment, co-insurance, premium and deductible.

Failing to understand insurance terms and your health plan's rules can lead to costly mistakes. Here are five of the most common health insurance mistakes consumers make and how to avoid them:

1. You focus on just your monthly insurance bill.

Experts say one of the most common errors people make is choosing a health plan based solely on the cost of its monthly bill, also called a premium. But your premium is not the only cost you'll face if you need medical care.

For example, most plans today require you to first meet a deductible, which may mean spending thousands of dollars before your insurer helps you pay the bills.

Once you meet that deductible, there are other out-of-pocket costs you're responsible for paying as well. Many doctor visits or lab tests, for example, require you to pay co-pays, which are fixed fees paid upfront for a doctor visit or prescription. In some cases, you may be responsible for co-insurance, a percentage of the cost of your care.

Depending on your medical needs, it may be less expensive for you in the long run to purchase a plan that costs more on a monthly basis but covers more out-of-pocket costs when you go for care.

'It's a matter of doing the math and figuring out how many visits and prescriptions you use over a year, so you can match that up to a medical plan that fits your needs,' says Carrie McLean, customer service director for the private insurance exchange eHealth.

2. You don't ask if your doctor is in-network.

Is your doctor in your health plan's network or out? The answer will have a big impact on your wallet.

'Seeing a doctor who is outside your plan's network can be very costly,' says Sabrina Corlette, project director with Georgetown University's Health Policy Institute.

In addition, Corlette says, finding a doctor who participates with your plan is more challenging today. As a way of keeping costs down, most insurers are limiting the number of providers they cover. As a result, many of the new policies being sold on the private insurance market today have smaller provider networks than before the Affordable Care Act took effect.

Furthermore, a recent report by Corlette and her colleagues at Georgetown University's Health Policy Institute found that insurers employ a tactic that is common with prescription drug coverage. In some cases, insurers are placing doctors and hospitals on different 'tiers.' That means even those considered 'in-network' with your health plan will be covered at different rates.

To avoid surprise bills, always check your doctor's network status before stepping foot in her office. And don't just rely on your insurer's provider directory - they're notorious for containing inaccuracies.

'Call both the insurance company and the provider to confirm that the provider is, in fact, in network before going for care,' Corlette says.