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Major medical insurance is the standard coverage form endorsed by health reform law although this coverage is losing popularity in the commercial insurance market due to its high cost. The advantage is that is covers rare but catastrophic medical bills that an individual would be unlikely to afford without insurance. The disadvantage is that a substantial portion of the most routine medical expenses, typically $2,000 to $4000 per year, are not covered due to policy deductibles, co-insurance and co-payments.
For 2013 we recommend a target budget for major medical insurance of 10% of household income with a cap of 12% of income. For example, a married couple with salaries of $30,000 each would have a total household income of $60,000, a target maximum budget for health insurance of $6,000 for the year, or $500 per month. (In some areas this is easy to accomplish and in other areas a difficult objective). A qualified health navigator will help narrow the range of available health plans to those that are appropriate for your household income.
Beginning January 1, 2014, all U.S. major medical insurance is "guaranteed issue", meaning that no applicants can be denied based on prior medical history.
By 2016, under health reform law, we expect the average price of health insurance to drop to 8.5% to 9.0% of household income for most middle income purchasers. This is partly due to price control measures and partly due to an increase in deductibles and out-of-pocket expenses.
Most important, remember that the cost of major medical insurance should not exceed 2/3 of the combined total household budget for all types of health insurance. Avoid spending so much on major medical insurance that there is no room for more important health coverage like disability income protection coverage. Supplemental coverage for dental costs and other more frequently incurred medical costs are more important in the eyes of many consumers. These financial expense targets will be difficult for some individuals and families before health reform becomes fully effective. For example, using the same married couple with $30,000 incomes, we expect the couple to have combined insurance expenses - income protection plus major medical plus supplemental coverage - of $750 per month.
Beginning in 2014 major medical insurance policies will be standardized into five categories, each with identical "minimum essential benefits". The intent is to make it easy to compare coverage across different insurance companies. Several states like Massachusetts and New Jersey already use this approach. Everyone who can afford this type of coverage is required to purchase it or obtain it through an employer. Premium subsidies are expected to be available to lower income purchasers. Until then the price, availability, medical qualifications and coverage details vary widely. Use of an agent or navigator can help in the search for the best options.
For self-employed people and those who purchase their own insurance, finding an affordable policy from a reliable insurance company can be a challenge. Two of the most reliable and cost-effective sources of major medical insurance throughout most of the United States are Celtic Insurance Company (available in 36 states) as well as a number of government-operated insurance exchanges. Both sources issue policies directly online based on a medical questionnaire in most states; there is no need to provide medical evidence of insurability. Since there are no health plans that are available everywhere in the U.S., it is necessary to check for availability where you live. The exchange will only quote plans that are available in your zip code.
A number of specialty insurance plans are also available for specific situations including:
Since the passage of federal health reform, "child only" policies (coverage for a child without an adult on the policy) are available only through non-commercial policies (see OnlineNavigator.org) or short term coverage (see Secure STM).
This web site is independently owned and managed by Tony Novak operating under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator". Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak is not an agent, broker, producer or navigator for any federal or state health insurance exchange but may provide uncompensated advice, reviews and referrals to these official resources. Novak is compensated as an accountant, adviser, affiliate consultant, marketer, reviewer, endorser, producer, lead generator or referrer to some of the other commercial companies listed on this site. Information is from sources believed to be reliable but cannot be guaranteed.