When people talk about health insurance, they typically mean Affordable Care Act (ACA)-qualifying major medical insurance. It’s also referred to as “minimum essential coverage” and “comprehensive coverage.”
And many individuals and families rely upon it for health benefits.
Major medical insurance is a comprehensive policy designed to help pay for covered healthcare expenses ranging from preventive services to emergency care. The ACA requires all major medical plans to be guaranteed issue and include basic requirements such as the 10 essential health benefits.
Major medical insurance is available through employers and to individuals through the ACA Federal health exchanges and private market health exchanges. It’s also available through public programs such as Medicaid and Medicare.
In this blog post, we’ll focus mainly on individual major medical insurance, the coverage available to individuals and families who don’t have access to job-based plans or public programs.
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What is major medical insurance?
Major medical insurance is designed to provide comprehensive benefits that help pay for covered hospital, surgical and medical expenses.1
The Affordable Care Act includes some requirements that every major medical plan must meet:
- Guaranteed issue coverage. You cannot be denied coverage or charged more based on your health history.
- Rate restrictions. Health insurance premiums are based on 5 factors: age, location, tobacco use, individual vs family enrollment, and plan category.2 Your rate cannot be impacted by health history or sex.
- Basic requirements. All major medical plans must cover services within the 10 essential health benefits, including specified no-cost preventive care.3
All major medical insurance plans must be ACA-compliant, or they’re not major medical plans!
What’s the cost of major medical insurance?
In 2018, the average unsubsidized Obamacare premium was $621.4 How much you’ll pay for health insurance depends on a number of factors, including the following:
- Where you live – Health insurance rates (and the plans available) vary by state and, within each state, by region.
- Plan selection – Generally speaking, the higher up the metal tiers you go, the more you’ll pay in monthly premium. If you choose a bronze plan, it’s going to cost you less than a gold plan. A platinum plan will cost more than a silver plan.
- Subsidy eligibility – Income-based subsidies (cost-sharing reductions and premium tax credits) are available to those who qualify and purchase their coverage from HealthCare.gov or a state-based exchange. Want to find out if you may be subsidy-eligible? Use the ACA Subsidy Calculator.
- Age – Older individuals can be charged up to three times more than younger individuals5
- Tobacco use – Tobacco users can be charged up to 50% more than non-users6
- Individual or family enrollment – Your rate will change if you add a spouse or dependent to your plan
Rates cannot be established based on health history, such as pre-existing conditions or sex.
Lower-premium Catastrophic plans are also available in many states to those under 30 years of age. Learn more about Catastrophic coverage and how to qualify.
What does major medical insurance cover?
The ACA requires all major medical plans to cover certain preventive services, including immunizations and screenings, at no additional cost to the insured.
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
How your major medical plan covers these benefits will vary depending on the coverage you have. For instance, your coinsurance and deductible amounts along with network restrictions will impact how much you pay.
Are Obamacare and major medical insurance different?
Early on, the Affordable Care Act took on the nickname “Obamacare.” It stuck, and sometimes that causes confusion.
However, they’re all the same: ACA plans are major medical plans. Major medical plans are Obamacare plans. Obamacare plans are ACA plans. These plans qualify as and are also sometimes referred to as “minimum essential coverage.”
You can buy major medical plans through HealthCare.gov, state-based exchanges and in the private health insurance market. Find out where to buy ACA-qualifying coverage in your state.
Why buy major medical insurance?
Though the ACA’s individual mandate is no longer enforceable with a tax penalty,8 major medical insurance is still a good idea. It can help you pay for healthcare you’d otherwise be responsible for paying 100% out of pocket.
And if you qualify for health insurance subsidies, enrolling in a major medical policy from the Federal Marketplace or your state’s Exchange during the annual open enrollment period or a special enrollment period (if you qualify) may be the best way for you to obtain comprehensive health insurance.
Find out if you could qualify for a health insurance subsidy.
Is major medical insurance right for me?
Individual major medical insurance plans are available to those who do not have access to a job-based health insurance plan; for example, those who are self-employed or work part-time and are therefore not eligible for their employer’s coverage.
You may want to enroll in major medical if you are:
- Buying coverage within the annual open enrollment period
- Eligible for a special enrollment period due to qualifying life events such as a move or birth of a child
- Able to qualify for an ACA subsidy, including premium tax credits or cost-sharing reductions
- Someone who requires ongoing healthcare or prescription drug coverage for a medical condition
Non-ACA Coverage with Short Term Medical Insurance
Not so sure major medical insurance is right for you? You may want to consider a non-ACA option such as short term medical insurance. This temporary coverage may help if you experience an unexpected illness or injury that results in emergency care or hospitalization.
Short term medical is not regulated by the ACA. These policies are not available in all states, do not include coverage for essential health benefits and are not guaranteed issue, meaning you can be denied coverage.
Premiums tend to be lower than unsubsidized major medical plans9 because they include less coverage. Your premium is based on many factors, including your health status and the benefit level you select.
Get a quote to find out if short term policies are available in your area and compare costs and coverage options.
How do I choose a major medical plan?
It can feel overwhelming to select a health insurance plan, and it’s often tempting to pick the one with the lowest rate. You’ll want to consider the big picture. Some things to consider:
- Your healthcare needs. Do you typically just use preventive services, or do you have medical conditions that require more frequent care?
- Your total budget for healthcare.What you can afford to pay in monthly premium and out-of-pocket medical expenses?
- Your preferred providers. Are there doctors or hospitals you prefer to use?
- Your subsidy eligibility. Could you qualify for premium tax credits and cost-sharing subsidies if you buy from a government exchange?
Read more in-depth about how to choose the right health insurance for you.
What if I can’t afford (or buy) Obamacare right now?
Does the cost of health insurance seem out of reach to you? Is it outside of open enrollment and you don’t qualify for special enrollment? Learn more about your options if you can’t afford Obamacare.
Consider alternatives to help pay for unexpected medical care such as short term health insurance.
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