What is major medical insurance?

There are many ways to get health insurance — and some plans are more comprehensive than others. Here’s what you need to know when searching for major medical insurance.

 

What’s major medical insurance?

Major medical insurance is comprehensive health insurance that covers doctor’s visits, hospitalization and other medical expenses. It generally has a deductible, coinsurance and maximum out-of-pocket limits, says Wayne Sakamoto, an independent health insurance broker in Naples, FL. 

Most employer health insurance plans are considered major medical plans. All plans sold on the state health insurance marketplaces or Healthcare.gov are also major medical plans. They must meet the Affordable Care Act’s standards, such as covering 10 essential health benefits:

• Emergency services
• Hospitalization
• Maternity care
• Mental health services
• Prescription drugs
• Outpatient services
• Rehabilitative services
• Laboratory services
• Preventive services and chronic disease management
• Pediatric services 

The ACA additionally prohibits insurers from rejecting people for coverage or charging them more because of pre-existing conditions. The health plans aren’t allowed to set annual or lifetime limits on coverage. 

Plans sold on the state marketplaces and healthcare.gov have out-of-pocket spending limits of:

• $8,550 for an individual 
• $17,100 for a family 

The out-of-pocket spending limit includes deductibles and coinsurance (and sometimes copays), but not premiums. The spending limit is the maximum you’ll spend out of pocket for the year, but the specific plan may have lower limits. 

 

What’s not major medical insurance?

Major medical insurance doesn’t include policies that only cover certain kinds of medical expenses, including:

• Schedule of benefit plans
• Critical illness plans
• Accidents plans
• Hospital indemnity plans
• Cancer plans
• Dental insurance
• Vision insurance

Schedule of benefit plans may pay a fixed amount for doctor’s visits, tests and hospital stays, regardless of the cost. So, you may receive $100 for a doctor’s visit, $200 for a medical test and $500 for an emergency room visit. If the cost of care is higher than that amount, you’re responsible for the rest of the payment.

Meanwhile, employers often offer them as supplemental major medical coverage, such as critical illness, accident, hospital indemnity and cancer plans. These types of plans pay out if you have specific illnesses or situations. Critical illness plans pay a fixed amount of cash if you have a certain condition, such as a stroke, heart attack or cancer. 

Another non-major medical insurance is hospital indemnity plans. These plans pay a fixed dollar amount in cash — such as $500 per day — if you’re admitted to the hospital because of a covered sickness or injury. Supplemental accident plans pay a fixed amount of cash if you have certain types of accidents. 

Also, cancer insurance pays a lump sum in cash — sometimes from $5,000 to $100,000, depending on the coverage — if you’re diagnosed with certain kinds of cancers. Some employers offer these coverages to supplement major medical insurance, especially if they have health plans with high deductibles.

 

How can you get major medical insurance?

Many people get major medical insurance through their employers. If you’re buying insurance on your own, you can purchase ACA-compliant individual health insurance through your state insurance marketplace or healthcare.gov. 

If your income is below 400% of the federal poverty level, you may qualify for a subsidy to help pay the premiums. The cut-off for receiving subsidies in 2021 is $51,040 for singles, $68,960 for couples or $104,800 for a family of four. 

See the Kaiser Family Foundation’s subsidy calculator to estimate how much of a subsidy you may be eligible for and see how much your premiums may be after receiving a subsidy. Your state marketplace or healthcare.gov can show you specific costs for the policies available in your area after a subsidy, based on your income.

You can also get major medical insurance through a health insurance agent, online or directly from some insurers. Some of the policies they sell may be the same as those sold on the marketplace and some may be different and not eligible for a subsidy but may also meet the ACA standards.

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