Major Medical Health Insurance Plans – The Good, The Bad & The Ugly


Major medical insurance is a term that is rapidly fading away due to the Affordable Care Act (ACA). Today, health insurance plans fall into five categories, or metal levels, that do not include the category called “major medical.”

The Good – In the past, major medical insurance plans were those that covered expenses in and out of the hospital and were also known as catastrophic plans.1 These plans usually had a cap on what the policy would pay, either for a lifetime and / or an episode of care. Fortunately, by law, lifetime and episodic limits are a thing of the past for ACA-compliant plans offering essential health benefits. Essential health benefits are services that must be covered by ACA-compliant medical insurance plans. This includes major care such as emergency services, yearly check-ups and much more.

Another good thing about catastrophic insurance (major medical) today is the number of services that are provided at no out-of-pocket cost to you (even if you have not met your deductible). These services relate to preventive care and include a full range of benefits for the whole family.

Catastrophic plans generally feature low monthly premiums and pay for nearly all in-network services once the deductible has been met.

 The Bad – Catastrophic plans have a couple of major drawbacks that may give pause –

  • You can only purchase these medical insurance plans if you’re under 30 years of age or have a “hardship exemption”
  • The deductible can be as much $6,850 for a single person and $13,700 for a family plan. That can be a lot of money to pay for medical care before your insurance kicks in

 The Ugly – It’s important to know that your major medical insurance plan may still have a cap on the total lifetime benefits for services that are not classified as “essential health benefits,” such as organ transplants or gastric bypass operations.2 Be sure and check your policy for the limits on your plan’s coverage.

In addition to certain plan limitations, catastrophic plans are not eligible for subsidies, even if your income is low. If you think you may be eligible for subsidies, a silver or bronze level plan may be a better choice. You can check your eligibility here.

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