Major Medical Insurance: The Basics

Major Medical Insurance, also known as health insurance, is the coverage you can purchase that helps pay for your medical needs. Your employer or the government can provide it, or you can buy it on your own. Its primary purpose is to prevent crippling costs that can add up after medical treatments and/or emergencies.

Before the Affordable Care Act (ACA), the term “Major Medical Insurance” referred to the most comprehensive health insurance plans. The ACA changed this definition by requiring all policies to provide many of the more-comprehensive benefits within these plans. These are called the Ten Essential Health Benefits. Following the change, “Major” is now the standard for medical insurance.

These days, you can get health insurance in three main ways: an employer, the government, or on your own. Because all three require a minimum level of coverage, they’re all considered major medical insurance. Here’s a chart showing how it breaks down:

Private health insurance plan types

If you enroll in health insurance individually or through an employer, you have several different plan types to choose from, including:

• Health Maintenance Organization (HMO)
• Preferred Provider Organization (PPO)
• Exclusive Provider Organization (EPO)
• Fee for Service (FFS)
• Point of Service (POS)
• High Deductible Health Plan (HDHP)

In-Network Versus Out-Of-Network: Does It Matter?

Staying in-network can have a significant impact on what goes into your coverage–and comes out of your pocket. Remember, “in-network” and “out-of-network” refer to provider networks. These are the groups of doctors and hospitals that are in contract with your insurance company.

If you don’t have access to employer-based health insurance or want to buy your own, you can purchase private coverage. The ACA created state and federal marketplaces (or exchanges) where you can shop for and purchase your health insurance. You can also buy health insurance off the market through a broker or enrollment advisor like GoHealth.

The most popular time to join is the Open Enrollment Period (OEP). The Open Enrollment Period runs from November 1 to December 15 each year, with the selected plan starting on January 1.

What if I miss Open Enrollment?

Certain life events may qualify you for a Special Enrollment Period, which is 60 days when you’re allowed to enroll in health insurance outside of the OEP. These are known as Qualified Life Events (QLE).

What if I Can’t Afford Major Medical Insurance?

The ACA established several ways for Americans to lower their cost of health insurance. When you apply for health insurance on the Marketplace, you’ll find out if you qualify for:

• Premium Tax Credits: If your income is within 100-400% of the Federal Poverty Level (FPL), you may receive subsidies to help pay your monthly premium.
• Cost Sharing Reductions (CSR): You may also qualify for CSR if your income is within 250% of the FPL. These are also called “extra savings” and are used to lower your out-of-pocket payments like deductibles, copayments, and coinsurance.