Health Insurance: Major Medical

Most Health Insurance Plans Sold Today are Major Medical Plans

nurse pushing patient in hospital bed
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Major medical health insurance is a type of health insurance that covers the expenses associated with serious illness or hospitalization. 

Major medical health insurance is the terminology that was historically used to describe comprehensive health plans that covered most necessary care. Once the Affordable Care Act was implemented, the term "minimum essential coverage" was frequently used instead.

Minimum essential coverage is what you have to have in order to avoid a penalty under the ACA, and all major medical health insurance plans count as minimum essential coverage.

"Real" Health Insurance

Major medical health insurance in layman's terms is what people would generally consider "real" health insurance. It does not include limited benefit plans, dental/vision plans, accident supplements, short-term health insurance, or critical illness plans, none of which are regulated by the Affordable Care Act.

Major medical plans usually have a set amount, or deductible, which the patient is responsible for paying. Once that deductible is paid, the plan typically covers most of the remaining cost of care, subject to co-insurance paid by the patient. Some plans also have co-pays for some services.

Major medical plans can be very robust, but they also include high deductible health plans that are HSA-compliant, and catastrophic plans as defined by the ACA.

The coverage you get from your employer is probably major medical health insurance, as is any plan you buy in the exchange in your state. Off-exchange plans are also major medical plans, as long as they're fully compliant with the ACA (all new major medical plans have to be ACA-compliant since 2014, including those sold outside the exchanges.

But supplemental coverage, limited benefit plans, and short-term plans can still be sold outside the exchanges, and are not regulated by the ACA).

Grandmothered and grandfathered health plans count as major medical coverage, although they can no longer be purchased. But if you still have coverage under these plans, you've got minimum essential coverage, and are not subject to the ACA penalty.

Updated by Louise Norris.

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