When people talk about health insurance, they typically mean major medical insurance. It’s the big guy, the comprehensive healthcare coverage that separates the insured from the uninsured. It’s minimum essential coverage that fulfills the Affordable Care Act’s (ACA) (also referred to as Obamacare) individual mandate, and it’s what many individuals and families rely upon for long-term 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 programs such as Medicaid and Medicare.
In this guide, 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.
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. Estimate your subsidy using our health insurance 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-cost 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 the private health insurance market.
Why buy major medical insurance?
For starters, major medical insurance can help you pay for healthcare you’d otherwise be responsible for paying 100% out of pocket.
The ACA includes something informally called the individual mandate (technically speaking: the individual shared responsibility provision) that took effect in 2014.
The individual mandate states that most Americans must have health insurance the law considers minimum essential coverage. Up until 2019, those who don’t have it and were not exempt from the mandate could owe a tax penalty.
However, beginning in 2019, the tax penalty will no longer be enforced, leaving the federal government no real way to enforce the requirement or keep people enrolled in major medical plans.8
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.
For the remainder of 2018, if you’re not exempt from the individual mandate, you’ll need to enroll in minimum essential coverage as defined by the ACA (e.g., major medical insurance, Medicaid, Medicare). Otherwise, you could owe a tax penalty.
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
- Not exempt from the individual mandate
- Someone who requires ongoing healthcare or prescription drug coverage for a medical condition
Not so sure major medical insurance is right for you? Starting in 2019, when the tax penalty is repealed, you may want to consider alternatives such as short-term medical insurance and hospital plans.9 These products do not provide the same level of coverage as major medical plans, but they can help cover expenses related to unexpected medical care.
In the meantime, a health insurance producer (i.e., agent or broker) can help you explore your options and determine which coverage options are available to you. Use Agent Finder to locate a producer near you.
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 premiumand 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?
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?
If you are exempt, rather than go without benefits, you may want to consider alternatives to help pay for unexpected medical care. These options may include a short-term health insurance plan a hospital plan, or bundled coverage that includes short-term and hospital plans.
Summary + Next Steps
Not sure where to begin? Use Agent Finder to locate a producer near you.
While ACA plans can only vary premiums based on geography, age, tobacco use and number of people covered (single vs. family plan), short-term plans can vary rates due to any number of factors, including health conditions.