What Does Major Medical Insurance Actually Cover?
Decode major medical insurance. Learn what comprehensive health coverage includes, your financial responsibilities, and its vital role in healthcare.
Major medical health insurance is a comprehensive form of health coverage designed to protect individuals and families from significant healthcare costs. It provides a broad safety net, covering a wide array of medical services. This article clarifies its core components, explains financial responsibilities, distinguishes it from other health plans, and outlines common avenues for accessing coverage.
Core Elements of Major Medical Insurance
Major medical insurance plans are comprehensive, covering a wide range of services for health maintenance and illness treatment. These plans include coverage for inpatient and outpatient hospital services, such as surgeries, diagnostic tests, and rehabilitation. This comprehensive approach extends to routine medical care, encompassing doctor visits, specialist consultations, and ongoing management of chronic conditions.
Prescription drug coverage is a fundamental component, often structured with different tiers for generic, preferred brand, and non-preferred brand medications. Preventative care, including routine check-ups, screenings, and immunizations, is frequently covered at 100% under Affordable Care Act (ACA) compliant plans. Major medical plans also cover emergency services, such as ambulance transportation and emergency room visits. Maternity and newborn care, along with mental health and substance use disorder services, are typically included.
Understanding Financial Responsibilities
While major medical insurance provides extensive coverage, policyholders share costs through several financial mechanisms. The premium is the regular payment made to the insurance company to maintain coverage, typically monthly. Individuals are usually responsible for a deductible, a set amount paid for covered services before the insurance company begins to pay. For instance, if a plan has a $2,500 deductible, the policyholder pays the first $2,500 of covered medical expenses.
After the deductible is met, copayments and coinsurance apply. A copayment, or copay, is a fixed dollar amount paid for a covered service, such as a doctor’s visit or a prescription, and may apply even before the deductible is met for certain services. Coinsurance represents a percentage of the cost of a covered service that the policyholder pays after the deductible has been satisfied, with 20% being common. For example, if a service costs $100 and coinsurance is 20%, the policyholder pays $20, and the insurer pays $80.
The out-of-pocket maximum represents the maximum amount an individual or family will pay for covered services within a policy period, usually a calendar year. Once this limit is reached, the insurance company pays 100% of the remaining costs for covered, in-network medical services for the rest of that year. This cap includes amounts paid towards deductibles, copayments, and coinsurance. For 2025, federal limits on out-of-pocket maximums are $9,200 for an individual and $18,400 for a family.
Major Medical vs. Other Health Plans
Major medical insurance stands apart from other health plans due to its comprehensive scope and consumer protections. Unlike major medical plans, short-term health insurance provides temporary coverage, often lasting less than 12 months, and is not required to comply with all ACA regulations. These temporary plans typically do not cover essential health benefits like prescription drugs or maternity care, and they can exclude pre-existing conditions.
Limited benefit plans, sometimes called fixed indemnity plans, differ from major medical coverage. These plans pay a fixed, predetermined amount for specific services, rather than a percentage of actual costs, and are not designed to cover comprehensive medical events. They offer lower and more restricted benefits, and are not ACA-compliant.
Supplemental plans, such as critical illness or accident insurance, are designed to complement major medical coverage, not replace it. These policies provide cash benefits for specific events, like a diagnosis of a critical illness or an accidental injury, to help cover out-of-pocket costs or other expenses not covered by a primary health plan. They offer additional financial protection.
Accessing Major Medical Coverage
Individuals and families have several primary avenues for obtaining major medical insurance. Many people receive coverage through employer-sponsored plans, where employers offer health benefits as part of compensation packages. These plans are typically comprehensive and considered major medical coverage.
Another common pathway is through Health Insurance Marketplaces, established under the Affordable Care Act (ACA). These online platforms allow individuals and families to compare and purchase ACA-compliant major medical plans, often with financial assistance like premium subsidies depending on income levels. Some major medical plans can also be purchased directly from private insurance companies outside of these marketplaces, provided they are ACA-compliant.
Government programs like Medicare and Medicaid also offer comprehensive health coverage for eligible populations. Medicare provides health insurance for individuals generally aged 65 or older, and certain younger people with disabilities. Medicaid offers health coverage to low-income individuals and families.