Kathleens Insurance Advice

When you go to purchase health insurance, understanding the terms used in the policy is key to finding the right plan for you and your family. Two plans may look similar but when you read the fine print you’ll find a few differences in language that can make all the difference in how your claims will be processed – and paid. Here is a quick guide to some of the terminology you may find and what the definitions can mean when it comes to coverage and care.

Major Medical vs Basic Medical
A health plan that is described as Major Medical or Comprehensive Major Medical will typically cover all medically necessary procedures unless they are specifically excluded in the policy language. A Basic Medical plan on the other hand will usually only cover procedures and treatments that are specifically listed in the policy documents. This difference can be huge. With a Basic Medical plan if you find yourself needing medical attention outside of the treatments called out in the policy, it won’t be covered by your policy. This can leave you with whopping medical bills and no insurance assistance at all. Basic Medical will almost always be lower in monthly premiums, but for a reason. If you want to be assured of having insurance coverage when you need it, be sure to choose a Comprehensive Major Medical plan.

Usual and Customary vs Reasonable
Some policies will pay hospitals and medical providers a usual and customary fee based on an agreed contract or what is reasonable for that area of the country. In some cases however, this Usual and Customary practice can cause problems. If your physician believes that a particular treatment is necessary but your insurance company doesn’t believe it is Usual and Customary, they can deny benefits for that claim, leaving you holding the bill.  Policies that list Reasonable however will generally cover procedures that a doctor believes is necessary. Look for broader language in your policy before you buy. Terms like Reasonable and Customary is better than Usual and Customary. Any language that includes Reasonable will generally have a broader scope of coverage.

Exclusions
Just as important as what IS covered in your health insurance policy is finding out what is NOT covered. Be sure to carefully examine the part of your policy that spells out what is excluded from coverage. Some treatments are covered but only after a period of time. Other policies have a general exclusion that states that anything not listed is not covered. Be sure to read the fine print to know exactly where your coverage begins – and ends.

With all of these differences, think of them as a benefit vs. cost trade off. While Basic Medical won’t have as comprehensive of a coverage plan as a Major Medical policy, they will also cost substantially less per month. Same with policies that only provide Usual and Customary coverage versus Reasonable coverage. You will need to balance the type of insurance you want with the amount of insurance you can afford to find a winning combination for you and your family. That said, knowing the difference gives you the power to make the decision before you buy instead of discovering the difference after it’s too late.