Major Medical Insurance: What Is It? (2024)

Major medical insurance offers comprehensive coverage, which most of us have come to expect from health insurance. It covers most medical services and procedures, from doctor visits to hospital stays, surgeries and prescription drug coverage.

Most insured Americans have major medical insurance, but it’s not the only type of health insurance available. If you’re considering purchasing health insurance, it’s important to clearly understand what major medical insurance—and its alternatives—offer to you.

What Is Major Medical Insurance?

People looking for medical coverage often want the best health insurance at the most affordable price. Major medical insurance is likely the most attractive option.

Major medical insurance is the type of coverage typically offered through a workplace and the Affordable Care Act (ACA) marketplace. This type of insurance covers the majority of health care services and procedures you might encounter in a given year, including:

• Preventive care
• Emergency room care
• Urgent care
• Outpatient care
• Mental health
• Labs and tests
• Prescription drugs
• Surgery and other procedures
• Hospital care

By contrast, other types of health care coverage usually aren’t as comprehensive. For example, short-term health insurance generally provides coverage for up to a year with the chance to extend for two more years in most states. Short-term plans offer lower premiums but higher out-of-pocket costs when you need care, fewer benefits and consumer protections than major medical health insurance.

Hospital indemnity plans are another type of health coverage. Indemnity plans offer a fixed benefit paid directly to you when you require hospital care. But this type of insurance doesn’t cover standard medical care and is meant to supplement—rather than replace—health insurance.

What Major Medical Insurance Covers

One of the hallmarks of major medical insurance found on the ACA marketplace is that it covers 10 essential health benefits as defined by the federal government. Private health insurance in group health insurance offered by employers also often covers these services.

The essential health benefits include:

• Ambulatory patient services
• Emergency services
• Hospitalization
• Pregnancy, maternity and newborn care
• Mental health and substance use disorder services
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventive and wellness services and chronic disease management
• Pediatric services

Health plans in the ACA marketplace must also provide birth control and breastfeeding coverage, though they’re not specifically listed under the essential health benefits.

Types of Major Medical Insurance

There are various ways to get major medical insurance, including:

ACA marketplace health insurance

This type of health insurance is available to individuals and families who cannot get affordable coverage through an employer. Private health insurance companies offer this type of comprehensive health coverage.

You can purchase individual and family insurance plans at the federal and state health insurance marketplaces. People who qualify for advanced premium tax credits and subsidies may pay less for an ACA plan. Only ACA plans provide those household income-related discounts.

Employer-sponsored health insurance

Most working Americans get their medical coverage through group health insurance coverage from an employer.

In many cases, employer-sponsored health insurance offers the most affordable and comprehensive health insurance option. Employers typically pay more than half of premiums costs, which makes it cheaper for employees.

Employees paid an average of $1,327 per year ($111 per month) for health insurance through an employer, while businesses paid an average of $6,584 annually, according to Kaiser Family Foundation’s 2022 Employer Health Benefits Survey.

COBRA

If you have coverage in a major medical plan at work and then leave or lose your job, COBRA insurance is an option for extending your coverage for a period, usually 18 to 36 months.

COBRA provides the same coverage you had with the employer plan, but you’re responsible for the full premium costs instead of splitting them with your provider. This can make COBRA coverage quite expensive.

Medicaid

Medicaid is a federal/state health insurance program primarily for low-income Americans and eligible children, pregnant women, the elderly and those with disabilities. Medicaid costs are based on your income.

Medicare

Medicare is the federal health insurance program primarily serving adults 65 and older. It also offers coverage to younger people with specific disabilities and those with end-stage renal disease.

Student health plans

This type of health insurance is typically available to college students, but many students don’t need this type of coverage, as federal law lets them remain on their parent’s health insurance plan until they turn 26.

Who Needs Major Medical Insurance?

Just about everybody needs major medical insurance. Perhaps those who are independently wealthy can self-insure. But if that’s not you, major medical insurance is essential. It provides preventive care and can help you avoid financial ruin if you’re hospitalized or develop a life-threatening or chronic health condition.

Some people skip major medical insurance and choose short-term insurance simply because it’s cheaper and they only want to bridge a short coverage gap. But you never know when your health will take a turn for the worse.

If that happens, major medical insurance can offer comprehensive coverage that saves you thousands of dollars.

How Much Does Major Medical Insurance Cost?

The average health insurance cost per month is $928 for a Bronze ACA plan. The average monthly costs increase to $1,217 for a Silver plan and $1,336 for a Gold plan. Those averages don’t consider premium tax credits and subsidies that can reduce costs for an ACA plan based on household income.

Health insurance companies set rates for ACA plans by age, plan type, metal tier and tobacco use. They can’t use gender or where you live.

Here’s the average cost by age.

A plan’s benefit design dictates such things as whether you can get out-of-network care and whether you need referrals to see specialists. Health maintenance organization (HMO) and exclusive provider organization (EPO) plans are typically cheaper than preferred provider organization (PPO) plans. Here’s the average cost by plan type.

A plan’s metal tier affects how much you pay in premiums and out-of-pocket costs. Here are the average premiums for Bronze, Silver and Gold plans.

How to Get Major Medical Insurance

There are many ways to get major medical insurance:

1. Through your employer. If your workplace offers group coverage, this is often the best and most affordable way to get coverage.
2. Through the ACA marketplace. Going to a federal or state health insurance marketplace is one way to get coverage if you can’t get it at work. These plans offer tax credits and subsidies if your household income qualifies.
3. Directly through an insurer or a website. You also can purchase directly from a health insurer or may be able to buy through a third-party website.
4. Through Medicaid. If you qualify, you can get coverage through this program, which is a joint effort between the federal government and individual states.
5. Through Medicare. If you are 65 or meet other criteria, you can get coverage through this federal program.
6. Through a college or other institution of higher learning. Students often can get coverage this way.

Major Medical Health Insurance vs. Short-Term Health Insurance

Major medical insurance provides more comprehensive coverage and better consumer protections than short-term insurance.

Two benefits of short-term insurance are that it’s much cheaper than major medical insurance, and you can buy it anytime during the year.

Following is a breakdown of the two types of coverage.

Major medical vs. short-term insurance

Major Medical Health Insurance vs. Hospital Indemnity Insurance

Hospital indemnity insurance is not a form of standard health insurance. Rather, it’s intended to supplement your primary insurance policy.

While major medical insurance covers most types of health care services and procedures, hospital indemnity insurance pays you if you’re in the hospital for an extended period. It doesn’t offer coverage for other types of medical services.

Following is a breakdown of the two types of coverage.

Major medical vs. hospital indemnity