Major Medical Insurance: The Basics
An overview of health insurance and how to get it
Reviewed by: Ed McClane, Licensed Insurance Agent. Written by: Aaron Garcia.
Major Medical Insurance is health insurance that covers the Ten Essential Health Benefits.
Health insuranceHealth insurance is a form of insurance that covers a portion of your medical expenses. In exchange, you pay a monthly premium and other costs. covers a portion of your medical expenses. In return, you pay charges like monthly premiumsA premium is a fee you pay to your insurance company for a health plan coverage. This is usually a monthly cost. and a deductibleA deductible is the amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself..
If you need to purchase health insurance on a marketplace, you can sign up each year during the Open Enrollment Period, or see if you qualify for a Special Enrollment Period.
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.
The 10 Essential Health Benefits
1. Ambulatory Patient Services
2. Emergency Services
4. Maternity and Newborn
5. Prescription Drugs
6. Laboratory Service
7. Preventive Care
8. Mental Health and Substance Abuse Treatment
9. Pediatric Care
10. Rehab Treatment
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:
Major Medical Health Insurance
|Medicare||Group coverage (employer-based)|
|Medicaid||Individual (purchased by you)|
|Children’s Health Insurance Program (CHIP)|
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 for 2021 begins Nov. 1, 2020, and ends Dec. 15, 2020. If you enroll in a plan during this time, it will start on Jan. 1, 2021.
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.
Is there basic health insurance?
No. All plans cover the Ten Essential Health Benefits. Some plans may offer more coverage, though. All health insurance plans are “Major Medical” today.
Does it matter where I live?
Yes. Where you live will have a significant impact on your coverage. Areas with a high number of doctors will tend to have more network options and a lower cost. The plans offered also vary depending on where you live, often down to your ZIP code.
How old do I have to be to enroll in major medical insurance?
Technically, you can enroll in your own health insurance at any age up until 65, which is when most people become eligible for Medicare (you can still have private insurance under some circumstances after the age of 65). The ACA made it possible for children to stay on their parents’ health plans until the age of 26. From the ages of 27 to 64, you must provide your health insurance, either through an employer or individually.
Do I have to have health insurance?
Depends on where you live. The ACA began an Individual Mandate, which said any Americans without health insurance would pay a tax penalty. The federal government removed that fine in 2019, but six states still require their residents to carry health insurance. Those areas are:
- New Jersey
- Rhode Island
- Washington D.C.