Major medical health insurance is also known as “catastrophic” health insurance because it typically covers more serious medical emergencies and comes with a high deductible and some out-of-pocket costs in exchange for a low monthly premium. Prior to purchasing a major medical insurance policy you will want to do your homework and make sure you know exactly what your policy options are, as well as, what restrictions your policy carries with it, and what costs you will be responsible for.
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What is the difference between a major medical insurance policy and a traditional insurance policy?
Major medical insurance policies are often preferred by those without a lot of extra money to spend on monthly insurance premiums. These individuals may not be able to get insurance benefits through their employer, may be unemployed, and are usually unable to qualify for state funded programs like Medicaid. The typical age groups of people seeking major medical health insurance policies are:
- Recent retirees who are waiting until age 65 when they are eligible to purchase Medicare
- Young adults in their twenties who are just starting out in a career and may not have insurance benefits or the ability to remain on their parents’ insurance policy any longer
Major medical health insurance covers you and protects you from large medical bills in the event of a serious health concern or emergency. Typically, major medical differs from traditional insurance because in exchange for a low premium you will have a high deductible and out-of-pocket expenses, sometimes called co-insurance. These expenses may be a percentage of the cost that is paid by each party and be stated as an 80/20 plan or 75/25 plan.
Some major medical plans also have annual or lifetime limits; however, this practice will be ended by all insurance companies by 2014 when the Affordable Care Act mandates insurance companies remove limits on care. For more information on the Affordable Care Act, visit http://www.whitehouse.gov.
What types of major medical health insurance policies are there?
One option you need to consider when purchasing major medical is which type of health insurance policy you need. Comprehensive major medical covers most medical expenses once you have paid your deductible. Supplemental or basic major medical only covers serious health issues or emergencies and is often purchased as a back up for a traditional insurance policy. Some people also opt to supplement their major medical policy with a tax-free Health Savings Account that can be used to cover deductibles and out-of-pocket costs.
What is and is not covered by major medical health insurance?
When shopping for major medical health insurance you want to make sure you are aware of exactly what a policy covers and does not cover. Many major medical plans do not cover treatments such as:
- Dental care
- Infertility treatments
- Blood work
- Mental health expenses
- Extended convalescent care
If your health warrants any of these regularly, you may want to consider paying more each month in exchange for a health insurance plan that provides more coverage. A good way to gain an unbiased consumer opinion of various companies and plans is to visit websites such as Consumer Reports or the Better Business Bureau.
What types of out-of-pocket costs might I incur?
Many major medical policies have out-of-pocket costs for care. These may be listed as an 80/20 or 75/25 cost meaning you pay 25% after the company pays 75%. Some policies have a “stop loss” limit where you will not pay any expenses beyond a certain annual amount.
Other policies do not have a set percentage you pay out-of-pocket for every claim, but will charge you out-of-pocket costs for certain services such as preventative doctor visits and prescriptions. In some cases, these costs can really add up so you want to make sure you are aware of them. One way to offset out-of-pocket costs is to open a Health Savings Account where money from your paycheck is set aside tax-free for medical expenses.
What types of deductibles should I look at with major medical health insurance policies?
It is important to examine the deductible options of a policy compared to the coverage and monthly premium costs. Many companies offer you several different deductible options that could range from $500 to as much as $10,000.
Deductibles also differ in terms of how often and when they are paid. Some plans have a deductible for each medical claim. Others have an annual or lifetime deductible. Family deductibles are available when you have a family insurance plan versus an individual plan.
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