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
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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.
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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.
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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.
Related Terms
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Health Insurance: Insurance coverage that pays for medical and surgical expenses incurred by the insured.
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Hospitalization Insurance: A type of health insurance covering the costs of being hospitalized, including room, board, and other essential hospital services.
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Deductible: The amount paid out-of-pocket by the policyholder before the insurance provider pays any expenses.
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Co-payment: A fixed amount paid by the insured for covered services, typically at the time of service.
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Coverage Limit: The maximum amount an insurance company will pay for covered services.
Online References
- Investopedia: Major Medical Insurance
- HealthCare.gov - Major Medical Insurance Basics
- Understanding Insurance Deductibles and Co-pays
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
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