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Major Medical (Catastrophic) Insurance

Major medical plans are a special type of fee-for-service plan that generally have very high deductibles. They are designed to provide protection against long-term chronic or catastrophic illness or injury. These plans cover a broad area of health care services and are designed to protect against large medical expenses. Typically included in a major medical plan are:

Health care reform. The Patient Protection and Affordable Care Act and related legislation heavily regulates the insurance industry, instituting benefit and coverage mandates. Except for grandfathered plans, it mandates that by 2014, all qualified health benefit plans offer at least an "essential health benefits package" as defined by the Secretary of Health and Human Services.

For more information, including the latest health care reform developments, visit the government's health care website.

Advantages of major medical plans. Despite the high deductible, the coinsurance requirement, and the ceiling on the amount of benefits, major medical plans have several advantages over basic benefit plans:

Types of major medical. There are two types of major medical plans: comprehensive plans that coinsure all covered medical expenses exceeding the deductible and, less common, supplementary plans that coinsure expenses in excess of the deductible and expenses in excess of those covered by another plan. Both supplementary plans and comprehensive plans place ceilings on the amount of benefits payable for each insured person.

Who will like major medical plans? Major medical plans may be popular with lower income earners if they are healthy because the cost is lower than some other, more comprehensive plans. In fact, the premiums are usually lower than they would be with an HMO. Low earners with health problems will not like them because of the deductibles involved.

Health Savings Accounts (HSAs). HSAs require high deductible catastrophic plans.


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