Buying health insurance is a confusing process. It’s hard to know what type of plan you should buy, and what is included in certain plans. Perhaps the most common type of insurance to have is major medical insurance. This type of insurance will help (usually with a co-payment) cover small medical expenses from going to the doctor or paying for prescriptions to more serious situations like being hospitalized or having surgery.

Major medical plans have many inherent benefits, which we’ll explore in greater detail throughout this article.

major medical overview

Minimum Essential Coverage

Under Obamacare (Affordable Care Act/ACA), individuals are required to have minimum essential coverage. If you have minimum essential coverage, you will not have to pay the tax penalty. All Marketplace insurance plans, ACA compliant plans purchased directly from a carrier and most job-based plans are considered to be minimum essential coverage.1

Essential Health Benefits

The Affordable Care Act requires that all ACA-compliant major medical plans cover a list of “essential health benefits.” Keep in mind that covered does not mean free and the amount you would pay for each service depends on your specific plan’s copayments, deductible, and coinsurance. However, you can be guaranteed that your insurance provider will at least pick up part of the tab for these services. Below are the 10 medical services that must be covered by your major medical plan through the Marketplace, insurance carrier, and many job-based plans:3

  • Ambulatory/outpatient care
  • Emergency visits
  • Hospitalization
  • Maternity care- care for you and your baby before and after birth
  • Services for mental health and substance use disorders
  • Prescription medication
  • Rehabilitative and habilitative services
  • Laboratory services
  • Services for prevention and wellness and chronic disease management
  • Pediatric services, including vision and dental

Other Benefits

In addition to the essential health benefits that must be covered, ACA-compliant plans must also cover in full (yes, free!) many preventive services for everyone. The only stipulation of these free services is that the healthcare provider must be in-network. Easy enough, right?

Some additional benefits are provided for women under Obamacare, such as coverage for several forms of contraceptives when prescribed by a provider in your network, as well as breastfeeding benefits, and cancer screenings. Dental and vision coverage is also required to be offered for children 18 years and under. Although it is not mandatory to purchase, it still must be an offered benefit for children.3

Avoiding the Tax Penalty

By law, if you do not have minimum essential coverage for the majority of the year, you will be subject to a tax penalty at the end of the year. This penalty could cost you hundreds of dollars, and possibly even more for your family, if you do not meet the health coverage requirements for the year. In 2014, this penalty was 1% of household income or $95 dollars per adult (whichever was greater). Since 2014, the penalty has been increasing and will continue to do so. For 2016, the penalty will cost those without minimum essential coverage 2.5% of their annual household income, or $695 per adult (whichever is greater).2

Aside from knowing that you have coverage if you get sick, not having to give almost $700 to the government in a tax penalty for yourself alone is likely more than enough motivation to enroll in a major medical insurance plan!

2014 - 1% of yearly household income or $95/person (whichever is higher)

2015 - 2% of yearly household income or $325/person (whichever is higher)

2014 - 2.5% of yearly household income or $695/person (whichever is higher)

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Citations

  1. Plan types that count as coverage. (n.d.). Retrieved September 15, 2015, from HealthCare.gov website: https://www.healthcare.gov/fees-exemptions/plans-that-count-as-coverage/
  2. The fee you pay if you don’t have health coverage. (n.d.). Retrieved September 11, 2015, from HealthCare.gov website: https://www.healthcare.gov/fees-exemptions/fee-for-not-being-covered/
  3. What Marketplace health plans cover. (n.d.). Retrieved September 11, 2015, from HealthCare.gov website: https://www.healthcare.gov/coverage/what-marketplace-plans-cover/