What is Major Medical?

Major Medical Insurance, sometimes called “catastrophic” policies, protects you from going broke from a major illness or accident. They often are much cheaper than standard medical insurance. If you are in good health and have few if any prescriptions, this could be the type of policy for you.  However, there are some things you need to know and questions to ask when getting one. First, Major Medical is at its best for hospital visits where you get the really big bills. However, the coverage for regular doctor visits and prescriptions is anywhere from lesser to none.  You also tend to have a higher deductible in exchange for your lower monthly insurance premium bill.  A deductible is the cost you have before the insurance company starts paying.  After you pay your deductible, that’s where the Coinsurance clauses usually start to activate. See also comprehensive.

What is Coinsurance?

Coinsurance means that you share the cost with your insurance company.  Usually this happens after you have paid your deductible.  So if you have a $500 deductible and a common 80/20 coinsurance, then for a $1500 medical bill, you would pay the $500 deductible, then the insurance company would pay $800 or 80% of the remaining, and you would pay $200 for a total of $700.  Still seems like a bunch to pay, right? For one bill, yes it is. However, what if you had another bill for $2000 dollars a short time later? Deductibles are usually per year, not per bill. So then the company pays $1600 and you pay $200. 

Also, there usually is something called a “stop loss” or “maximum out-of-pocket expense”. This is the maximum you need to pay for per year.  A standard one for Major Medical Insurance might be $2,000 to $3,000 per year, but amounts vary. Your deductible is included in this.  So in our above examples, you will have paid a total of $900 dollars toward that yearly cap. Your insurance company will continue to pay 80/20 until you reach the cap. Then it will pay 100% to what is called the “lifetime maximum”.  Quite often this is one or two million dollars. After the insurance company pays that much, the policy expires. While Major Medical policies seldom cover prescription costs, they usually have this deductible/coinsurance setup for doctor visits. Now that you know about Major Medical policies and Coinsurance, you can ask questions to insure you get the policies with the best benefits for the least money. Experts in the industry suggest that you seek and obtain at least three free online quotes.