Major Medical Insurance

A form of supplemental medical insurance that covers medical costs not included under basic health and hospitalization insurance. Typically, the insured is required to pay a deductible before the major medical insurance plan begins to pay for covered services.

Definition

Major Medical Insurance refers to a type of health insurance designed to cover all medical costs not included under basic health and hospitalization insurance. This insurance is typically used to cover significant and catastrophic health expenses, ensuring comprehensive financial protection against extensive healthcare costs. Most major medical insurance plans have a deductible that the insured must pay out-of-pocket before the insurance coverage initiates.

Examples

  1. John’s Deductible and Coverage: John has a major medical insurance policy with a $1,000 deductible. After an emergency surgery costing $5,000, John pays the initial $1,000, and the insurance covers the remaining $4,000.

  2. Mid-Range Medical Costs: Sarah undergoes various outpatient therapies that total $1,200. With her major medical policy, after paying a $200 deductible, her insurance covers the remaining $1,000.

  3. Extensive Hospitalization: Michael’s hospitalization costs amount to $50,000. Given his deductible of $5,000, he pays this amount first, and the insurance covers the remaining $45,000.

Frequently Asked Questions (FAQs)

What is the purpose of a deductible in major medical insurance?

A deductible is the amount the insured must pay out-of-pocket before the insurance policy begins to pay for covered services. This helps to prevent minor claims and ensures that insurance is used for substantial medical expenses.

How does major medical insurance differ from basic health insurance?

Basic health insurance typically covers routine healthcare costs and preventive services, while major medical insurance provides additional coverage for extensive and catastrophic health expenses that are not covered by basic plans.

Are there any limitations to what major medical insurance will cover?

Yes, major medical insurance policies may have specific exclusions, limitations on certain treatments, and maximum benefit limits. It’s essential to review the policy terms to understand what is covered and what is not.

Can major medical insurance plans include prescription drug coverage?

Yes, some major medical insurance plans may include optional coverage for prescription drugs, but this varies by policy and provider.

Is major medical insurance mandatory?

Major medical insurance is not mandatory. However, it is highly recommended as it provides financial protection against significant healthcare expenses that can lead to substantial indebtedness.

  • Health Insurance: Insurance coverage that pays for medical and surgical expenses incurred by the insured.

  • Hospitalization Insurance: A type of health insurance covering the costs of being hospitalized, including room, board, and other essential hospital services.

  • Deductible: The amount paid out-of-pocket by the policyholder before the insurance provider pays any expenses.

  • Co-payment: A fixed amount paid by the insured for covered services, typically at the time of service.

  • Coverage Limit: The maximum amount an insurance company will pay for covered services.

Online References

Suggested Books for Further Studies

  • “Health Insurance: A Comprehensive Guide” by Benjamin C. Hites
  • “Understanding Health Insurance: A Guide to Billing and Reimbursement” by Michelle Green
  • “The Essentials of Health Care Finance” by William O. Cleverley and James O. Cleverley
  • “Healthcare Finance: An Introduction to Accounting and Financial Management” by Louis C. Gapenski

Fundamentals of Major Medical Insurance: Insurance Basics Quiz

### What component of major medical insurance needs to be paid before coverage begins? - [ ] Co-payment - [ ] Premium - [x] Deductible - [ ] Out-of-pocket max > **Explanation:** A deductible is the amount the insured must pay out-of-pocket before the major medical insurance coverage starts. ### Major medical insurance is primarily used to cover what type of expenses? - [ ] Routine check-ups - [ ] Cosmetic procedures - [x] Catastrophic health expenses - [ ] Over-the-counter medications > **Explanation:** Major medical insurance is designed to provide coverage for extensive and catastrophic health expenses that are not typically covered by basic health insurance. ### What is a common feature of major medical insurance plans? - [x] High coverage limits - [ ] No out-of-pocket costs - [ ] No exclusions - [ ] Immediate coverage with no deductible > **Explanation:** Major medical insurance plans usually offer high coverage limits, ensuring financial protection against substantial medical expenses after the deductible is met. ### Can major medical insurance include prescription drug coverage? - [x] Yes, but it varies by policy. - [ ] No, it never includes drug coverage. - [ ] Yes, always included. - [ ] Only for emergency drugs. > **Explanation:** Some major medical insurance plans may include prescription drug coverage, although this varies depending on the specific policy and provider. ### Why is major medical insurance valuable? - [ ] It reduces the need for basic health insurance. - [x] It provides financial protection against huge medical bills. - [ ] It covers every possible medical treatment. - [ ] It automatically lowers healthcare costs. > **Explanation:** Major medical insurance is valuable as it offers financial protection against significant medical expenses, which can help prevent financial hardship. ### What must the insured pay at the time of receiving medical service even with major medical insurance? - [x] Deductible or co-payment - [ ] Full service cost - [ ] Premium - [ ] Contribution > **Explanation:** Even with major medical insurance, the insured generally needs to pay either a deductible or co-payment when receiving service before the insurance kicks in for the remaining costs. ### Which term is related to the maximum amount an insurance company will pay for covered services? - [ ] Deductible - [ ] Premium - [x] Coverage Limit - [ ] Co-payment > **Explanation:** Coverage Limit refers to the maximum amount an insurance provider will pay for covered services within a specified period. ### Does major medical insurance cover all incurred medical expenses? - [ ] Yes, all expenses are covered. - [x] No, there are exclusions and limits. - [ ] Only expenses above $1,000. - [ ] Yes, including elective procedures. > **Explanation:** Major medical insurance does not cover all medical expenses as there are usually exclusions and coverage limits specified in the policy. ### When can major medical insurance be activated? - [ ] Immediately upon policy purchase - [x] After the deductible is paid - [ ] After co-payments reach a certain limit - [ ] Once every six months > **Explanation:** Major medical insurance coverage activates once the insured has paid the specified deductible amount. ### What aspect of major medical insurance helps to ensure it's used primarily for significant expenses? - [x] A high deductible - [ ] Immediate co-payments - [ ] Monthly premiums - [ ] Lifetime limits > **Explanation:** The presence of a high deductible helps to ensure that major medical insurance is used primarily for substantial and significant medical expenses rather than minor claims.

Thank you for exploring Major Medical Insurance with us! Continue enhancing your understanding and proficiency in insurance matters for a secure future.

Wednesday, August 7, 2024

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