Medicare True Out-Of-Pocket Coast (TrOOP) Explained

Health insurance exists so you won’t have to pay for medical costs out of your own pocket. For most Americans, having health insurance is a top priority, however, understanding how it works can be difficult. Health insurance can be complex, and there are many aspects of it that are misunderstood by many. If you are struggling to understand how health insurance works, you aren’t alone.



Why Do I Need Health Insurance?

The cost of healthcare in America can be astronomical, and it is necessary to have. If you cannot afford to pay for healthcare on your own, government assistance in the form of Medicaid may be available to you. Individuals over the age of 65 typically qualify for a government program known as Medicare. In general, only the wealthiest Americans can afford to pay for healthcare out of pocket.

If you don’t have adequate health insurance, you risk medical bankruptcy. Medical bankruptcy occurs when a person does not have enough to pay their medical bills, so they must declare bankruptcy. Having health insurance is just like having insurance for your home or vehicle. It protects you from having to empty your bank account in the event of a major medical emergency. Unlike other forms of insurance, you do not have to wait to utilize your benefits and receive care.

Important Health Insurance Terms

Health insurance companies offer a variety of choices for coverage, however, before you select the plan that is right for you, you must understand various terms such as copay and premium. Here are some terms you should familiarize yourself with before purchasing a health insurance plan:

• Premium – You must pay your monthly premium even if you never submit a claim. Your premium helps the health insurance company pay for its expenses and ensure you maintain your coverage.
• Copay – A copay is a set amount you must pay for a visit to the doctor or hospital or a prescription. For example, your health plan may require you to pay $40 to visit the doctor and $10 for a generic prescription medication.
• Deductible – The deductible is the amount you must pay before your plan will cover your medical expenses. Your deductible must be paid at the beginning of each year if your plan has a calendar-year policy.
• Coinsurance – The percent you must pay for medical procedures, such as hospital stays or surgeries is known as coinsurance. For example, if you have an 80/20 health insurance plan, it will cover 80% of your expenses and you will be responsible for the other 20%. 

If you are like many people, you may be wondering why insurance companies require you to pay deductibles, coinsurance, and copays. Simply put, your insurance company doesn’t want you running to the doctor for every stomach ache. If no one had to pay anything towards their healthcare expense, insurance company costs would significantly increase. Fortunately for policyholders, the Affordable Care Act ensures out-of-pocket costs for Marketplace plans cannot exceed a certain amount.

Finding the Right Plan

When accounting for the details above, you might notice that choosing a health plan isn’t the easiest task in the world. You must select a plan that fits within your budget but provides you with the coverage you need. In some cases, a policyholder will prefer a plan with lower deductibles but higher monthly premiums. In other cases, a policyholder may prefer a plan with higher deductibles but lower monthly premiums. If you suffer from a chronic health condition that requires frequent visits to the doctor, such as diabetes or depression, you may want to choose a plan with a lower deductible. On the other hand, if you are relatively young and healthy and rarely visit the doctor, you may prefer a plan with a higher deductible and a lower premium.

The History of Health Insurance

Prior to World War II, the majority of Americans had no health insurance. Most policies only provided coverage for hospital stays. After the war, government officials implemented a wage freeze to prevent inflation, but this also prevented employers from paying their employees a living wage. To make up for these lower wages, employers began to offer other benefits, such as health insurance. In the 1950s, the IRS decided health insurance premiums should be non-taxable.

The Health Insurance Marketplace

If your employer doesn’t offer health insurance or the coverage they offer isn’t adequate, you can purchase coverage through the Marketplace. The Marketplace allows individuals to choose a health insurance plan that fits their needs and budget. If a person earns less than a certain amount, they can even qualify for a subsidy that will help them pay their premium. Individuals may enroll during a specific window of time, but if they need coverage outside of this window, they will need to have experienced a qualifying life event, such as losing insurance or getting married.

Contact Us

If you are seeking the perfect plan for you and your family, a health insurance broker may be able to assist you. Health insurance brokers are professionals who help individuals and companies find and choose the right health plans. Contact Sackett & Associates Insurance Services today to speak with a broker.