Major Medical Expense InsuranceBasic Insurance Question FAQ
Major medical policies are package policies that pay for a wide variety of expenses such as hospital room and board, surgery and other physician services, nursing care, drugs, and prosthetic devices. They provide high benefit limits, often as high as $1 million or $2 million or more in lifetime benefits which help to cover catastrophic coverage needs. Major med policies include deductibles and coinsurance.
Deductible - The amount the insured must pay before the insurer pays any benefits.
Co-insurance - A percentage of costs beyond the deductible that the insured pays up to a certain stated amount, after which amount the insurer pays 100% up to the policy limits.
Family Deductible - The maximum deductible paid for all family members on a family policy, usually two to three times the individual maximum. A family of five with a $500 individual co-insurance maximum would need to pay only $1,000 or $1,500 for all family members combined. Coverage is provided as a supplement to Basic Medical Expense plans or as a stand-alone Comprehensive Major Medical policy. The family deductible is a stop-loss feature for the insured.
Stop-Loss Feature - This provision (also known as an out-of-pocket limit) places a dollar limit on the insured's yearly out-of-pocket expenses. After the deductible and co-insurance payments reach the stop-loss amount, the insurer pays for covered expenses up to the policy's maximum benefit amount. The higher the stop-loss amount, the lower the premium.
Provisions Affecting Premium Cost to Insured
- Deductible amount
- Co-pay percentage
- Maximum benefit amount
- Coverages and Exclusions