Medical Expense Insurance
Structure of medical expense coverage
Medical expense insurance reimburses the cost of care. Basic plans cover hospital, surgical, and medical expenses; major medical adds high limits and broader coverage. Cost-sharing layers: deductible, coinsurance (often 80/20), copayment, and out-of-pocket maximum (stop-loss), which caps the insured's exposure. Inside limits cap specific services.
ACA framework
Non-grandfathered individual and small-group plans must cover ten essential health benefits, guarantee issue regardless of health, prohibit pre-existing condition exclusions, and allow dependents to stay on a parent's plan to age 26. Preventive services must be covered with no cost sharing. Annual and lifetime dollar limits are prohibited. Metal tiers describe actuarial value: bronze 60%, silver 70%, gold 80%, platinum 90%. Cost-sharing reductions apply only to silver plans. Insurers must meet a medical loss ratio (80% individual/small group, 85% large group).
Supplemental and limited products
Hospital indemnity, critical illness (lump sum on diagnosis), cancer policies, accident-only plans, and short-term medical (not ACA-compliant, subject to underwriting and limited duration) fill gaps but are not comprehensive major medical.
Traps
Metal tiers do not change the covered benefits - only the share of costs. Medicare Supplement (Medigap) plans do not include prescription drug coverage and cannot be used with Medicare Advantage.
Rule of thumb
Read the question for the layer it names: deductible first, then coinsurance, then the out-of-pocket maximum.
Worked example
$2,000 deductible, 80/20 coinsurance, $6,000 out-of-pocket maximum; a $12,000 claim leaves the insured paying $2,000 plus 20% of $10,000 = $4,000 total, still under the maximum.