Major Medical Health Insurance Overview

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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 the ACA's penalty for being uninsured, and all major medical health insurance plans count as minimum essential coverage (the penalty for being uninsured will be eliminated after the end of 2018, although there's still a penalty that applies if you're uninsured in 2018—it will be assessed on 2018 tax returns that are filed in 2019).

"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 will also cap your out-of-pocket exposure for in-network services. In 2018, all ACA-compliant plans must cap in-network out-of-pocket costs (for essential health benefits) at no more than $7,350 for an individual and $14,700 for a family. In 2019, this upper limit on out-of-pocket costs will rise to $7,900 for an individual and $15,800 for a family.

Major medical plans that are not ACA-compliant (ie, grandmothered and grandfathered plans) can have higher out-of-pocket limits, but it would be highly unusual for even these plans to have unlimited out-of-pocket costs (note that traditional Medicare, without a Medigap supplement, does not have a cap on out-of-pocket costs, but this is not the model that private insurance typically follows).

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

Where Can You Get Major Medical Coverage?

The coverage you get from your employer is probably major medical health insurance. If you work for a large employer, they have to offer coverage that provides minimum value in order to comply with the ACA's employer mandate. A plan that provides minimum value will generally also be considered major medical coverage, as it will be fairly comprehensive.

Any plan you buy in the exchange in your state will be considered major medical coverage. 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; these plans are not regulated by the ACA and are not considered major medical coverage).

If you buy coverage in the exchange in your state, you may be eligible for premium subsidies to offset the cost of purchasing major medical coverage. For 2018, subsidy eligibility for a family of four extends to household incomes as high as $98,400 (eligibility is capped at 400 percent of the poverty level; this chart shows what that amounts to in dollars for various family sizes; on the low end, subsidies aren't available if your income is below the poverty level, or if you're eligible for Medicaid). 

Medicare and most Medicaid plans also count as minimum essential coverage, and can thus be considered major medical plans (some people qualify for limited-benefit Medicaid coverage—Medicaid that only covers pregnancy-related services, for example—and this would not be considered minimum essential coverage or major medical coverage).

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 major medical coverage), and are not subject to the ACA penalty. Grandfathered plans can remain in force indefinitely, as long as they're not substantially changed. Grandmothered plans can remain in place until as late as December 31, 2019, at the discretion of states and insurers.

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