Major medical insurance is a type of health insurance which is designed to cover most major medical expenses, such as hospital care, prescriptions, surgery, and so forth. The precise coverage offered by the policy can vary considerably, with most insurance companies clearly detailing the medical issues which are and are not covered. For example, a major medical insurance plan will usually not cover cosmetic surgery, because it is treated as elective, and it will also usually not cover alternative medical treatments such as massage, acupuncture, and so forth.
When a major medical insurance policy is written, the insured party pays a premium. Insurance premiums may be due monthly, quarterly, or yearly, depending on the terms of the plan. Typically, there is a brief waiting period before the coverage kicks in, which is designed to prevent people from only seeking insurance when they anticipate heavy medical expenses, such as those associated with a cancer diagnosis. People with pre-existing conditions may also find that these conditions are explicitly excluded from their major medical insurance.
Paying a premium usually does not mean that the insured party gets free care in all of the areas covered by the policy. Most policies come with a deductible, a set dollar amount which the policyholder must pay out of pocket before the insurance will start paying. In a so-called “first dollar” policy, there is no deductible, and the insurance pays from the start, but the premium can be substantially higher.
Policyholders with major medical insurance must also deal with copays or coinsurance. A copay is a set dollar amount which someone must pay every time a service is accessed, while coinsurance means that the insurance company covers a set percentage of health care, and the patient is expected to carry the rest. Copays and coinsurance are often designed on a sliding scale, like a $10 United Stated Dollars (USD) copay for prescriptions as opposed to $25 USD for office visits, or coinsurance which covers 90% of prescriptions, but only 80% of office visits.
Comprehensive major medical insurance is designed to act as someone's primarily health insurance policy, covering everything that he or she might need. Supplemental coverage, on the other hand, piggybacks with another health insurance policy to pick up slack and ensure that the patient is completely covered. When purchasing supplemental policies, people need to be careful to avoid overinsurance, in which they are insured redundantly and usually paying amply for the privilege.