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Health Insurance Major Medical - Purchasing Major Medical Health Insurance Policies

defining health insurance major medical health insurance plans typical insured

When reviewing insurance options, it can get very confusing with all the different terms and types of insurances available. Health insurance comes in many forms, from comprehensive health policies to managed care policies, and even Health Insurance Accounts (HAS’s) that are offered by employers.

One of the easiest forms of health insurance to understand is called major medical health insurance which provides basic coverage at a cost that is more reasonable than full comprehensive plans that cover doctor’s visits and preventive care.

Defining Health Insurance

Health insurance policies have monthly premiums that go towards indemnifying (to protect against loss; to cover) a person when illness occurs and medical care is needed. Insurance companies indemnify people based on class, which is age, sex, health conditions, and charge monthly rates accordingly. Of course, the larger the group of people covered, the more dollars the insurance has to cover the risk of any one person’s illness.
The cost on health insurance can be high if a person is not covered through some type of employer or association group. Those seeking to reduce premiums often look to insurance coverage through major medical plans.

Major Medical Health Insurance Plans

Major medical, or a “catastrophic” plan, is the portion of insurance that covers hospitalization. Major medical insurance plans will cover costs associated with hospitalizations such as surgery costs, room and board, intensive care, tests and x-rays, and laboratory expenses.

Major medical plans usually have the following components:

•Deductibles – the annual amount of money an individual must spend on medical care before insurance company payments begin. Deductibles can range from $250 upwards of $2,000.
•Co-insurance – the amount of money, usually a percentage of cost, an individual will be responsible for paying along with the insurance company payment. Insurance companies usually pay 80 percent of hospitalization costs.
•Out-of-pocket limit – the annual maximum amount an individual pays towards co-insurance before the insurance company pays 100% of remaining costs. Out-of-pocket costs can range from $2,000 up to $10,000.
•Lifetime maximums – the total amount of dollars an insurance company will pay towards any one individual’s cost of medical care throughout the life of the insurance policy.

Major medical health insurance plans may differ in requiring levels of payments an individual is responsible for, so reviewing several options is always beneficial. The deductibles, co-insurance, and out-of-pocket amounts are annual amounts, and must be satisfied every year. They are not cumulative, which means each new insurance plan contract year will start at zero for individual cost contribution.

The way to lower monthly premium payments is to increase deductibles and out-of-pocket limits. The higher the dollar amount an individual is willing to pay towards health insurance in major medical plans, the lower the monthly premium will be. If an individual has a $5,000 out-of-pocket financial responsibility before an insurance company begins paying for costs, then the risk to the insurance company is less, therefore monthly premium costs will reflect that lowered risk.

Typical Insured

Anyone can qualify for health insurance major medical policies. The average insured is an individual seeking coverage for catastrophic events and is willing to pay for preventive and physician care. Major medical health insurance is an option many self-employed individuals choose due to the relatively low premium cost.

A young individual in good health and who maintains that healthy status by exercising and not smoking might find a major medical health insurance plan works well, especially if her employer does not offer health insurance coverage.

An older individual that does not have employer-sponsored health insurance but does not qualify for Medicare might find that a major medical insurance plan is a good option.

With the rising cost of healthcare and the increasing number of potential illnesses that can occur, some health insurance coverage makes sense. If doctor visits and preventive care are costs that are not prohibitive due to good health status, and maternity benefits are not required, then health insurance through a major medical policy could meet an individual’s needs.

Always seek multiple quotes, make sure the plan’s coverage policy is reviewed (especially for any waiting periods and exclusions), and check with the local Insurance Commissioner to ensure the insurance plan is in good standing.

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