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 Major Medical Insurance is a term used to describe a supplemental insurance program that's associated with Medicare. Generally, the major medical program is designed to provide health care insurance protection against medical expenses that occur after the age of 65.
In this publication we're going to try and eliminate the confusion about major medical and its relationship to Medicare. We're also going to discuss the most common form of major medical - Medigap insurance. Finally, we're going to finish up by telling you how to go about choosing a major medical insurance provider.
What is Major Medical?
Major medical insurance plans have grown a great deal since they were first introduced back in 1949. According to the Census Bureau, Housing and Household Economic Statistics Division there are an estimated 38.1 million individuals covered by the Medicare program and many of those same individuals are enrolled in a major medical plan.
Major medical offers enrollees the chance to protect themselves from paying a substantial portion of their medical expenses, including hospital and physician charges. Today, insurance carriers are beginning to offer more attractive major medical benefits as they find themselves competing for business with health maintenance organizations and self-funding health care programs offered by employers.
Such competing medical offerings also include Medicare Part C, formerly known as "Medicare+Choice," which is now known as "Medicare Advantage". If you are entitled to Medicare Part A and enrolled in Medicare Part B, you are eligible to switch to a Medicare Advantage plan, provided you reside in the plan's service area.
Major Medical Coverage
The coverage provided by major medical typically falls into one of two types - supplemental health care insurance and increased benefits / coverage. For example, if someone is hospitalized after age 65, then major medical can provide coverage that supplements Medicare's hospital benefits. It can also provide supplemental coverage to any doctor's fees or medical services the patient receives.
Alternatively, major medical can provide healthcare benefits to patients that are not available through the Medicare program. Expenses associated with mental health treatment, drug abuse, medical expenses while traveling abroad - these are all examples of expenses that may not be covered under a Medicare plan, but can be part of a supplemental major medical plan.
Medigap Policies versus Major Medical
Today, the most common form of a major medical insurance policy is a Medigap insurance policy. Medigap plans are sold by private insurance companies to provide supplemental / major medical insurance coverage to its clientele.
One of the nice features of Medigap plans is that they are standardized using an alpha designation. For example, Medigap plans range from Plan A through Plan J. As the plans move through the alphabet, the amount of supplemental coverage increases. That means Medigap Plan J provides the most comprehensive coverage available today under the Medigap program.
Medigap plan designations are also standardized within each state. That means you can go to any state in the United States and the plan designations will be exactly the same. There are three exceptions to this rule - Massachusetts, Wisconsin and Minnesota which have slightly different plan coverage definitions.
This feature makes it easy to compare medical coverage between insurance companies - so the real comparison boils down to cost. In other words, one insurance company offering a Medigap Plan C provides the same exact medical coverage as a competing insurance company offering a Medigap Plan C. This standardization feature makes comparison shopping easy for consumers.
Sharing in Health Insurance Costs
As mentioned earlier, Medigap Plan A through J differ in costs to consumers, the breadth of coverage, as well as the sharing in heath care costs. And while the exact cost sharing relationships are different for each plan, they all include the following components:
- Co-payments - that are small fee paid at the time medical services are rendered.
- Co-insurance payments - that is a sharing of medical expenses (usually stated on a percentage basis).
- Plan deductibles - that are dollar values that must be satisfied before medical benefits begin.
As the benefits of each of these payment types become more attractive to the consumer, the monthly premiums will increase. So buying major medical insurance often comes down to a balancing of costs with coverage.
In practice, you may also decide that you value other features of an insurance company - such as their customer service reputation - but everything else being equal, cost is the only difference worth looking into.
Purchasing Major Medical Insurance
When you purchase Medicare supplemental insurance, there is usually two parts or components of the insurance policy that you need to worry about. The first has to do with hospital insurance and the second part has to do with medical expenses.
If you purchase a Medigap policy, you will continue to pay Part B - which is medical insurance - directly to Medicare. That means you also need to pay two premiums if you decide to purchase major medical insurance. The first continues to go to Medicare; the second premium goes to the insurance company providing the Medigap policy.
The cost of supplemental major medical insurance can vary quite a bit between insurance companies. And the cost of the insurance will also vary with your age. Some companies will calculate insurance premiums based on your age at the time of enrollment. Other companies will increase the premiums annually as you age.
Medicare Open Enrollment
The best time to purchase major medical insurance is during open enrollment. This time period lasts for six months starting on the first month you reach the age of 65 and you are enrolled in Medicare Part B. If you purchase insurance during open enrollment, then there are certain rules the insurance company must adhere to:
- You cannot be denied coverage.
- Premiums cannot be adjusted to account for a previously existing medical condition.
- Conditions cannot be placed on the policy.
These three benefits - which can be quite big - are why so many individuals select their Medicare coverage during open enrollment.
About the Author - Major Medical Insurance
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