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we have discussed “basic” benefits that are designed to cover some hospital, medical and surgical costs that are primarily considered to be minor.  When purchased individually, these benefits can be substantially less than actual costs incurred.

Here is where Major Medical coverage enters the picture.  Major Medical covers a broader range of medical expenses providing more complete coverage.  Generally speaking, these more extensive types of policies fall into two categories:

1. Comprehensive.  This is the more traditional basic coverage and any other type of medical expenses are combined into a single policy.

2. Supplemental.  This coverage usually begins with a traditional basic policy.  That coverage pays first and the major medical coverage is added to include expenses that are not covered by the basic policy.

The primary distinction between supplemental and comprehensive major medical coverage is that supplemental plans distinguish between basic and major medical for reimbursement purposes.  Comprehensive plans combine the two types to cover essentially all types of medical expenses.

Let’s take a more in depth look at comprehensive major medical benefits.  There are two types of comprehensive major medical plans, one with first dollar coverage and the other without.

Just as the first term implies, first dollar coverage begins as soon as covered medical expenses are incurred.  Without first dollar coverage, the insured must pay specified “deductible” amounts first.  When that amount of expenses incurred has been paid by the insured, the policy begins reimbursing. 

Major medical coverage has another feature, coinsurance.  This means that the insurer and the insured share in any expensive above the deductible amount.  The insurer will always carry the bulk of expenses and normally pays 80% and the insured pays 20%.  Other proportions may be used so it is important that you read your policy thoroughly.

Some policies dictate that certain types of medical expenses are not subjected to the deductible while other types are.  For example it is non uncommon for no deductible to apply to initial hospital and/or surgical expenses up to a specified amount.  In a case like this, the insured would pay no deductible in expenses but would first pay the deductible before major medical covered any additional expenses.  The insurer and insured would then share in the remaining expenses at 80% and 20% or whatever the percentage is in their applied policy.

It is becoming more common for major medical polices to include a “stop-loss limit.”  This limit would be a dollar amount that, when reached, the insured no longer participates in any further payment.

This is generally referred to as a stated maximum benefit.  The lifetime maximum limits on health insurance might range from $100,000 to $1,000,000.  Some policies can even have unlimited benefits.  Just as the maximum benefit can vary, so can the amount of the stop-loss limit depending upon the insurer.

Supplemental major medical benefits supplement a basic policy that includes hospital, surgical and medical with an additional policy that covers the broader range of medical expenses.

Usually the basic plan will pay covered expenses with no deductible up to the policy limit.  Beyond that limit, the supplemental policy operates the same as a comprehensive policy that provides no other first dollar coverage. 

This means that after the basic policy limits are exhausted, a deductible kicks in followed by the major medical coverage. 

Just as the comprehensive major medical policy, a supplemental plan will more than likely include stop-loss limit as well as a maximum benefit limit.

Here are some of the conditions and expenses covered by major comprehensive health policies:

- Hospital inpatient room and board including intensive and cardiac care

- Nursing services including private duty outside a hospital

- Hospital medical and surgical services and supplies

- Physicians’ diagnostic, medical and surgical services

- Anaesthesia and anaesthetist services

- Other medical practitioners’ services

- Outpatient services

- Ambulance service to and from a hospital

- xRays and other diagnostic and lab tests

- Radiologic and other types of therapy

- Prescription drugs

- Blood and blood plasma

- Oxygen including administering

- Dental services that are a result of injury to natural teeth

- Convalescent nursing home care

- Home health care services

- Prosthetic devices when initially purchased

- Casts, splints, trusses, braces and crutches

- Rental of durable equipment like hospital style beds and wheelchairs

Let’s review some of the other major medical concepts such as deductible features, benefit periods and restoration of benefits.

Deductibles can be handled in several different ways depending on your policy.  One method might be on a per-cause deductible which applies to sickness or injury.  Other policies may have a deductible known as all-cause which is sometimes called cumulative or calendar-year deductible.

If your policy is per-cause you will pay a single deductible for all expenses you incur for the same injury or illness.  Your benefit period for each cause begins when deductible has been meant for that injury or illness.  This can sometime run as long as one or two years.

It is important to understand the per-cause stipulation.  Let’s look at an example.  If you are ill in May and then are injured in an accident in July those are two separate causes and deductible must be met for each of them separately.

However, if your policy is based on an all-cause deductible, the expenses for various injuries or illnesses are accumulated to meet your deductible in one calendar year.  Once that is met, the rest of your charges are paid for that calendar year.

Additionally, using the all-cause method there is usually carryover provision that allows you to carry over expenses from the last three months of one calendar year to the next.

If your policy covers the entire family, then a family deductible will apply rather than individual deductibles.  In other words if a policy’s individual deductible is $200 a family deductible might be $400.  This can be very advantageous because a six member family would only have to meet $400 rather than $1200 individually.

One other type of deductible could also be beneficial to a family and that is the common injury or illness provision.  What this means is that if two or more family members are injured in a common accident or become sick from the same illness, only one deductible amount will be required.

The time during which benefits are paid is called a benefit period.  These times are generally linked to the deductible as well as any inside or internal limits in the major medical policy. 

Determining when a benefit must be paid can be one of two different ways.  The benefit period might begin either on the first day of an injury or illness or on the date that the insured meets the deductible and can extend up to two years.  Or, the benefit period may cease at the end of a calendar year and begin with a new deductible.

Benefit limitations placed on certain of the various coverages in a major medical policy are considered inside or internal limits.   In other words, the policy may limit both room and board and number of days that will be paid.  In this case, the period for hospital room and board will be whatever number of days that are specified.  Other internal limits might be restrictions for convalescent are days, mental health, x-rays and similar items.

Your restoration of benefits is the time at which you can expect your benefits to resume after policy limits have been met.  For instance, a lifetime level might be as much as $500,000 and an insured might use up half or more of that in a single year.  This leaves only $250,000 left for the remainder of his life.  

Some policies allow the maximum to be restored if the insured can prove that he is once again insurable.  Other policies may have an automatic reset provision restoring a specified amount every January 1^st.