SolveYourProblem eLearning Series:
Health Insurance: Your Questions Answered
What does everything mean & how to choose the right policy
( 18 pages )

Major Medical Coverage

Here is where Major Medical coverage enters the picture. Major Medical covers a broader range of medical expenses providing more complete coverage. Generally speaking, these more extensive types of policies fall into two categories:

1. Comprehensive. This is the more traditional basic coverage and any other type of medical expenses are combined into a single policy.

2. Supplemental. This coverage usually begins with a traditional basic policy. That coverage pays first and the major medical coverage is added to include expenses that are not covered by the basic policy.

The primary distinction between supplemental and comprehensive major medical coverage is that supplemental plans distinguish between basic and major medical for reimbursement purposes. Comprehensive plans combine the two types to cover essentially all types of medical expenses.

Let’s take a more in depth look at comprehensive major medical benefits. There are two types of comprehensive major medical plans, one with first dollar coverage and the other without.

Just as the first term implies, first dollar coverage begins as soon as covered medical expenses are incurred. Without first dollar coverage, the insured must pay specified “deductible” amounts first. When that amount of expenses incurred has been paid by the insured, the policy begins reimbursing.

Major medical coverage has another feature, coinsurance. This means that the insurer and the insured share in any expensive above the deductible amount. The insurer will always carry the bulk of expenses and normally pays 80% and the insured pays 20%. Other proportions may be used so it is important that you read your policy thoroughly.

Some policies dictate that certain types of medical expenses are not subjected to the deductible while other types are. For example: it is non uncommon for no deductible to apply to initial hospital and/or surgical expenses up to a specified amount. In a case like this, the insured would pay no deductible in expenses but would first pay the deductible before major medical covered any additional expenses. The insurer and insured would then share in the remaining expenses at 80% and 20% or whatever the percentage is in their applied policy.

It is becoming more common for major medical polices to include a “stop-loss limit.” This limit would be a dollar amount that, when reached, the insured no longer participates in any further payment.

This is generally referred to as a stated maximum benefit. The lifetime maximum limits on health insurance might range from $100,000 to $1,000,000. Some policies can even have unlimited benefits. Just as the maximum benefit can vary, so can the amount of the stop-loss limit depending upon the insurer.

Supplemental major medical benefits supplement a basic policy that includes hospital, surgical and medical with an additional policy that covers the broader range of medical expenses.

Usually the basic plan will pay covered expenses with no deductible up to the policy limit. Beyond that limit, the supplemental policy operates the same as a comprehensive policy that provides no other first dollar coverage.

This means that after the basic policy limits are exhausted, a deductible kicks in followed by the major medical coverage.

Just as the comprehensive major medical policy, a supplemental plan will more than likely include a stop-loss limit as well as a maximum benefit limit.

What expenses are covered under major medical policies? No matter whether they are supplemental or comprehensive, both will generally cover the following even if they vary slightly from policy to policy:

• Hospital inpatient room and board including intensive and cardiac care
• Nursing services including private duty outside a hospital
• Hospital medical and surgical services and supplies
• Physicians’ diagnostic, medical and surgical services
• Anesthesia and anesthetist services
• Other medical practitioners’ services
• Outpatient services
• Ambulance service to and from a hospital
• xRays and other diagnostic and lab tests
• Radiologic and other types of therapy
• Prescription drugs
• Blood and blood plasma
• Oxygen including administering
• Dental services that are a result of injury to natural teeth
• Convalescent nursing home care
• Home health care services
• Prosthetic devices when initially purchased
• Casts, splints, trusses, braces and crutches
• Rental of durable equipment like hospital style beds and wheelchairs

Let’s review some of the other major medical concepts such as deductible features, benefit periods and restoration of benefits.

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