Hassle-Free Health Coverage: Comprehensive Medical Expense
As we've already seen, major medical coverage is considered hospitalization insurance. It doesn't cover all medical expenses-the way that traditional indemnity coverage does. What do you do about these other expenses? Paying for them out-of-pocket is the simplest option. But you need to be cash-rich to do this. So, most people will look for some kind of insurance to add on to their major medical.
An additional challenge to a smart insurance consumer is that many companies don't sell traditional indemnity health coverage that starts with the first dollar. These companies force policyholders to start with major medical and build additional coverage from there.
So, in some situations, you may be faced with the prospect of buying a comprehensive medical expense plan. This kind of insurance adds coverage for basic-and not necessarily hospital-related- medical expenses to the major medical coverage.
As we saw in the previous chapter, basic medical expenses are sometimes insured on a stand-alone basis.
The comprehensive plan is simply a combination of:
Basic Medical Expense + Major Medical
This may seem like a long way to walk around the insurance block in order to get back to something like the traditional indemnity coverage we've considered earlier. It is. The long walk is a testiment to how convoluted insurance coverage can be.
The comprehensive plan consists of a block of first dollar benefits followed by a deductible and a typical major medical plan. This plan might specify that 100 percent of the first $5,000 or $10,000 of reasonable and customary expenses will be covered. Once this bundle of first dollar benefits is exhausted, you must satisfy a deductible, usually referred to as a corridor deductible, and then the major medical benefits are activated.
All of the provisions common to a basic hospitalization plan as well as the provisions and concepts related to major medical plans, ie., deductibles, coinsurance, stop loss, etc., are found in this type of plan.
The following table illustrates key features of a comprehensive medical expense plan.
COMPREHENSIVE MEDICAL EXPENSE PLAN Basic Medical Plan 100% of the first $10,000 of expenses 80/20% co-insurance on the first $5,000
Corridor Deductible $500
Major Medical Plan No deductible or coinsurance 100% after $10,000 to the policy maximum
The question raised by the comprehensive plan is whether or not you would be better off with this plan or simply a "straight" major medical plan. Does the block of first dollar benefits really enhance your overall protection?
To answer these questions, let's use the same $20,000 hospital bill just used to reflect the payment of major medical expenses. We'll use the comprehensive plan illustrated above.
