Americans can save money by selecting a health insurance plan wisely.

Many Americans find it challenging to determine which health insurance plan offers the best value.

A study of nearly 24,000 employees at a prominent Fortune 100 company revealed that 61% of them selected the incorrect plan for their requirements. The researchers at Carnegie Mellon University, who conducted the study, estimated that the average employee could have saved $372 annually by opting for a different plan.

According to a study by Carnegie Mellon associate professor of economics Saurabh Bhargava, the majority of employees opted for more expensive health care plans, regardless of their actual consumption in the following year, and on average, the cost of these choices amounted to about 2% of their salary.

Health-care costs are significantly impacting American households. In 2018, over 8% of total household spending was allocated to health care, which is a 37% increase from 2004, when it represented 5.9% of total household spending.

According to a poll from the Kaiser Family Foundation in October 2021, about forty-six percent of Americans find it challenging to cover the out-of-pocket expenses for medical care that their insurance does not cover.

Anya Samek, an associate professor of economics at the Rady School of Management at the University of California, San Diego, stated that it appears people are unable to optimize their well-being due to difficulties in comprehending the decision environment.

Understanding the jargon used by insurance companies is a significant challenge when selecting a health care plan. According to Policygenius' 2020 Health Insurance Literacy Survey, only approximately 1 in 3 individuals can accurately define three common health insurance terms: premiums, copays, and deductibles.

Bhargava stated that the fundamental illiteracy is likely the root cause of several issues that individuals face when selecting from a plan.

The video above explains why Americans often struggle to choose the most financially advantageous insurance plan and provides tips for avoiding missed opportunities.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.