Major medical insurance
Also known as: major medical expense insurance
Major medical insurance is comprehensive health coverage with high benefit maximums that pays for a broad range of medical expenses — hospital, surgical, and physician costs — subject to deductibles and coinsurance.
Major medical insurance is health coverage designed to protect against large, catastrophic medical costs rather than just routine bills. Compared with basic medical expense plans, major medical policies traditionally feature high lifetime or annual benefit maximums (the ACA now bars lifetime and annual dollar limits on essential health benefits in non-grandfathered plans) and broad coverage — hospital room and board, surgery, physician services, prescription drugs, and related expenses — in exchange for cost-sharing by the insured.
That cost-sharing takes two main forms. The insured first pays a deductible out of pocket before benefits begin. After the deductible, the insurer and insured split covered costs through coinsurance, commonly 80/20, until the insured reaches a stop-loss (out-of-pocket maximum), after which the insurer pays 100% of covered charges. These features let insurers price broad coverage affordably while discouraging overutilization.
Exam questions often distinguish two designs. A supplementary major medical policy sits on top of a basic medical expense plan, picking up where the basic plan's limits leave off — often with a corridor deductible between the two layers. A comprehensive major medical policy combines basic coverage and major medical protection in a single integrated contract with one deductible and coinsurance structure. Comprehensive plans are the model for most modern health insurance.
The health insurance licensing exam tests major medical heavily within classes of coverage: know its high maximums and broad scope, how deductibles, coinsurance, and stop-loss limits interact, and that comprehensive policies combine basic and major medical benefits in one contract.
Key takeaways
- Major medical insurance provides broad health coverage with high benefit maximums aimed at catastrophic costs.
- Insureds share costs through a deductible, then coinsurance (commonly 80/20), capped by a stop-loss limit.
- Supplementary major medical layers on top of a basic plan, often separated by a corridor deductible.
- Comprehensive major medical combines basic and major medical coverage in one policy — the model for most modern health plans.