What is Major Medical Insurance?
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Major medical insurance offers robust coverage for many different types of health care needs. It pays for prescription drugs, visits to the doctors, hospital stays and surgeries.
To qualify as major medical insurance, a plan must meet specific coverage requirements set by the Affordable Care Act (ACA), also known as Obamacare. Some types of health insurance, such as short-term health insurance and accident insurance don't meet these standards. However, most employer-sponsored health insurance plans and all of the plans on your state's health care exchange qualify as major medical insurance.
What is major medical insurance?
Major medical insurance has strong coverage for a range of common health problems.
The focus of major medical insurance is providing coverage for illness, hospital stays and preventive health care such as vaccines. Major medical health insurance plans follow Obamacare or ACA rules for qualifying coverage. These "qualified plans" cover 10 different types of services, also known as minimum essential coverage.
You can buy major medical insurance on your own through a state health exchange or broker or directly through an insurance company. Many employers offer group health plans that qualify as major medical insurance.
What does major medical health insurance cover?
Major medical insurance provides coverage for illnesses and injuries, along with preventive care. Basic hospital and surgical policy benefits are usually included also. The ACA requires all major medical plans to cover an extensive list of preventive services that includes services for vaccines and screenings. All major medical plans must cover at least these 10 health service categories.
Obamacare essential health benefits
- Prescription drugs
- Pediatric services
- Outpatient services
- Laboratory services
- Rehabilitative/habilitative services and devices
- Maternity and newborn care
- Preventive services
- Emergency services
- Mental health/addiction services
- Hospital stays
Comprehensive major medical policies usually combine regular health insurance with supplemental coverage, such as dental, vision or special programs to help with specific medical needs like diabetes care.
Does major medical insurance cover preexisting conditions?
A major medical policy typically covers preexisting conditions because they are required under ACA rules. Health insurance companies can’t refuse to cover you or charge you more because of a health problem you had before the start of your coverage.
All marketplace plans must cover treatment for preexisting medical conditions. No insurance plan can reject you, charge you extra or refuse to pay for any of your 10 essential health benefits for any condition you had before your coverage started.
Once you are enrolled, your plan can’t deny you coverage or raise your rates based solely on your health.
Grandfathered plans — an exception to the preexisting conditions rule
The preexisting coverage rule does not apply to "grandfathered" individual health insurance policies. A grandfathered policy is one you bought for yourself or your family on or before March 23, 2010, through an insurance company, agent or broker. These plans might not cover some rights and protections included in the ACA, including coverage for preexisting conditions.
What types of major medical insurance plans are available?
You can choose from several types of health insurance plans, such as work-sponsored group plans or individual health insurance plans you can buy from your state's health exchange. Each plan is designed to meet different needs. With certain plan types (options sometimes referred to as managed care plans), you are encouraged to use a specific provider network for your care. Others pay more toward services received outside the plan’s provider network.
Major medical insurance examples
- Any health plan bought through the Health Insurance Marketplace
- Health plans bought outside the Health Insurance Marketplace that follow ACA guidelines
- Coverage through an employer or a parent's plan
- Most student health plans
- Certain veteran's health care including VA coverage
The best health insurance plan for you will be the one that meets your financial and health care needs. Choosing the right health plan is a big decision, so it is important to review your options.
Standard major medical insurance
Major medical insurance plans fall under one of the following four coverage types. They are accessible through your state's health insurance exchange or through an insurance company or broker.
Health maintenance organization (HMO)
Preferred provider organization (PPO)
Exclusive provider organization (EPO)
Point of service (POS)
Major medical policies typically use an HMO or PPO model.
Depending on where you live, you may find any or all of these options available to you at each metal level — Bronze, Silver, Gold and Platinum.
Each metal tier is designed to pay a certain percentage of your medical costs. For example, a Bronze plan is supposed to pay 60% of your health care costs, and you're responsible for paying the other 40%. Plans that cover a larger share of your medical bills usually cost more per month.
Metal tiers
Metal plan | Insurance pays | You pay |
|---|---|---|
| Bronze | 60% | 40% |
| Silver | 70% | 30% |
| Gold | 80% | 20% |
| Platinum | 90% | 10% |
What is Catastrophic insurance?
Catastrophic health insurance is another category of coverage that is also available through the marketplace. These programs have low monthly rates, but the deductible — the amount you pay before your coverage kicks in — is very high. A Catastrophic plan may be a way to protect yourself from worst-case scenarios, like getting seriously sick or injured, but you’ll pay most routine medical costs yourself.
You can only buy Catastrophic health insurance if you're under 30 or if you apply for a hardship exemption because you can't afford regular health insurance.
Catastrophic plan rates are usually cheaper than other plan types. However, you aren't eligible for a premium tax credit if you have a Catastrophic plan. Before you choose a Catastrophic plan, check to see if you qualify for a premium tax credit based on your income. If so, a Bronze or Silver plan might give you a better value.
For 2025, the deductible for all Catastrophic plans is $9,200. After you pay that much, your insurance company pays for all covered services.
What does a Catastrophic plan cover?
Catastrophic plans cover the same 10 essential health benefits as other types of comprehensive medical insurance. And, like other plans, Catastrophic plans cover certain preventive services at no cost. You can also visit your main doctor up to three times per year even if you haven't paid your deductible.
How do I buy major medical insurance?
If you need to buy major medical insurance on your own, you can apply through your state insurance exchange. Or, you can work directly with an insurance broker or company to purchase an "off-exchange" plan.
It is important to remember that while off-exchange major medical plans have ACA-qualified coverage, they are not eligible for subsidies that could lower your monthly rates. Check first to see if you qualify for either of these benefits before deciding where to purchase your health insurance.
You can only buy major medical insurance during open enrollment, which typically runs from Nov. 1 through Jan. 15. You can apply through a special enrollment period if you have a qualifying life event.
Examples of qualifying life events
- Losing health coverage
- Moving
- Getting married
- Having a baby
- Adopting a child
You can find plans and prices on your state's health exchange. You can also get quotes based on how much you make and find out whether you qualify for a cost-sharing subsidy.
If you prefer to work directly with an insurance company, you can contact them through their website or customer service or sales centers.
Major medical insurance plans vs. other insurance: What’s right for me?
You may be able to work with a private company to enroll in insurance that isn't considered major medical health insurance. None of the following types of coverage are health insurance in the conventional sense. Instead, they may help you deal with costs not covered by your main health policy.
Examples of nonqualified insurance
- Vision or dental coverage
- Workers' compensation
- Specific disease or condition coverage
- Medical services discount plans
The ACA does not regulate these limited benefit plans because they do not provide coverage for the 10 essential health benefits. Although they're not suitable as stand-alone health coverage, you may add one or more of these policies to your major medical coverage.
Non-major medical insurance plans don't have to cover preexisting conditions. These plans can deny or change your coverage based on your age or medical history.
Fixed indemnity plans
This type of medical insurance pays a fixed amount for a specific event or for a predetermined period of time, regardless of the actual cost. For example, a plan might give you a one-time payout of $200 when you're admitted to the hospital, or you might get $100 per day during a hospital stay for up to 90 days. These plans may have annual and lifetime benefit limits, and they may have specific benefit limits per the type of service.
Accident and health (A&H) insurance
Also known as accident insurance, these policies reimburse you for accidents or injuries. The policies typically have benefit amounts ranging from $1,000 up to $10,000 or more per event. Most accident supplements have small deductibles.
Critical illness plans
A critical illness plan covers a specific disease or condition and pays you a lump sum after you're diagnosed with a covered illness. Critical illness plans cover conditions like cancer, organ transplants, heart attacks, strokes, renal failure and paralysis. There is no coverage if you’re diagnosed with a disease that is not on the specific list for your plan, and the list of covered illnesses is different from plan to plan.
Benefit amounts can range from $5,000 to $200,000 or more. Rates are based on the benefit amount and your age.
Short-term plans
These plans offer temporary coverage, generally for a year or less. Short-term health insurance can be a good option if you find yourself in a transition such as moving or a job change. Short-term plans often exclude certain types of care altogether (for example, prescription drugs, maternity care or mental health care), and they put a cap on the overall amount that the insurance company will pay for your care.
Limited benefit plan summary
Limited benefit programs can work as temporary coverage or as an add-on to your major medical plan, but they are not intended for use as long-term, stand-alone insurance. Consider the pros and cons of limited benefit plans as you work through your decision.
Pros
Cons
Frequently asked questions
What does major medical insurance cover?
Under Obamacare, major medical insurance must cover all 10 essential health benefits, also called minimum essential coverage. These include a range of coverage areas, such as prescription drugs, routine check-ups, surgery and emergency services.
The full list of minimum essential coverage areas includes prescription drugs, pediatric services, outpatient services, laboratory services, rehabilitative and habilitative services and devices, maternity and newborn care, preventive services, emergency services, mental health and addiction services and hospital stays.
What is Catastrophic health insurance?
Catastrophic health insurance is a cheap type of major medical insurance that comes with a very high deductible. Catastrophic health insurance exists to help you pay for health care costs if you have a medical emergency, but it isn't suitable for day-to-day concerns.
You can only buy a Catastrophic health insurance plan if you're younger than 30 or if you qualify for an exemption because you can't afford a better plan.
What is the difference between basic and major medical insurance?
Major medical insurance offers health care coverage that follows Affordable Care Act (Obamacare) guidelines and covers a wide range of medical needs. Basic medical insurance refers to other types of health insurance that don't meet these standards, such as short-term health insurance and A&
Sources
Information about Affordable Care Act guidelines came from HealthCare.gov.
Editorial note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.