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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 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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