What Is Major Medical Insurance—Why Is It Important?

Matt Allen (00:05)
Welcome back to another episode of Talking of course is an acronym for straight health insurance talk. I am Matt Allen, joined once again today by Aaron Miller. Aaron, how we doin'?

Aaron Miller (00:18)
We're doing great over here, Matt. How about yourself?

Matt Allen (00:21)
Wonderful. We got a only a four day week. We just had Labor Day. you got a fresh haircut. I mean, I feel like we're just ready ready to rock.

Aaron Miller (00:32)
Absolutely. Yeah, I got a couple of concerts I'm going to this week. Pump for that.

Matt Allen (00:37)
Okay.

Aaron Miller (00:39)
yeah. It's concert season.

Matt Allen (00:40)
So you you

you subbed out wedding season for concert season, and then you're gonna have football season

Aaron Miller (00:47)
yes.

Matt Allen (00:48)
and then holiday season? Is that kind of the flow?

Aaron Miller (00:53)
don't forget open enrollment in there.

Matt Allen (00:55)
boy. Yeah. Yeah that's a new that's a that's a newer season for you though. New were.

Aaron Miller (01:01)
Newer season. Yeah, football

season. I'm trying to decide how dedicated I want to be to the football season. I think NCAA's unfortunately lost a little bit of its luster for me. So the NFL I think is gonna be my primary football experience.

Matt Allen (01:20)
This is coming from a Buckeyes fan, folks. That's crazy. I

Aaron Miller (01:26)
It is.

Matt Allen (01:26)
didn't think I'd see the day, but alright. Okay. Hey?

Aaron Miller (01:32)
Still go buckeyes, but you know, I don't need to watch them beat up on ball state all year.

Matt Allen (01:38)
okay NFL's a little more competitive. You got more teams, maybe doing a little fantasy, a little DraftKings. All right, okay. I love the NFL. I'm total NFL.

Aaron Miller (01:48)
Bingo.

Matt Allen (01:49)
I don't do any N N C double A, but that's certainly not what we're here to talk about. What are we here to talk about?

Aaron Miller (01:57)
Today I want to talk about a phrase we hear a lot. And whenever I'm talking to people, you know, what are they searching when they're looking for early retirement health insurance? It's major medical. And it's a phrase

Matt Allen (02:10)
Mm.

Aaron Miller (02:11)
that we don't touch on a whole lot. And so I wanna just briefly you know, let's talk about major medical. What is major medical? And then we can dive into some of the I guess terminology needed to, you know

look at and explore your options.

Matt Allen (02:32)
This is a great topic. And a little disappointed we haven't covered it yet. Major medical. So many people will say, Well, I just want a major medical plan. And it's one of those phrases we find all over in health insurance. All the different phrases used in health insurance, they mean different things to different people. And so some people will come in and say, I want a major medical plan.

And to them that means it's just gonna cover the big stuff. It's gonna cover the major medical events. And that is the origin of where the phrase came from. Way back in the day, health

Aaron Miller (03:13)
Mm.

Matt Allen (03:14)
insurance was only designed for the large medical expenses. I think the very first policy that ever came out was offered to

It was down in Texas. I think it was offered to Baylor University, employees, something like that. Where it was a seven-day plan, like per year, it would cover seven days in the hospital, all your expenses. And that was that was the whole plan. That was it. That's all it did. Because it was designed to just cover a major medical expense. Going to your doctor, going to the pharmacist, whatever.

That's all you just pay for that. You just pay cash. It's like car maintenance. You just pay for the oil change, you pay for the tire rotation. But if you get into a wreck, that's when you bring out the auto insurance. That was the origination of health insurance. But now major medical has become this amalgamation of just shoving all these other benefits in there with it. And a lot of people really like that because they're more.

frequently utilizing the healthcare system and they want more of their care covered, which is another one of those catchwords. What does covered actually mean?

Aaron Miller (04:30)
Mm-hmm.

Matt Allen (04:31)
And there's other people who are pining to just get back these major medical plans. I want that thing you just talked about, Matt, maybe not as as truncated as just seven days in the hospital per year. That's way too limited. But I just want the big stuff covered. I'm gonna pay for my doctor visit. I'm gonna pay for my generic med.

A lot of people really want to go back to the old definition because the new definition of major medical is something that covers, you know, preventative care at a hundred percent. It covers ambulance. It covers prescription. It covers mental health. It covers maternity. It covers all of these other things that I'm not necessarily saying are bad things. People shouldn't be doing this. you're overutilizing the healthcare system. I'm not saying that anything in like that at all. But what I'm saying is

As you add more pieces to what this major medical insurance covers, the cost has to go up because now the insurance company is on the hook to pay for more of these things. So to get back to your original question about what is major medical, well, that term kind of has gone by the wayside. It has been replaced since the Affordable Care Act came out, and the terms are still interchangeable, but they have substituted the term qualified health plan, a QH.

And what a QHP is, is it's something that covers the MEC, which is minimum essential coverage, and the 10 essential benefits. The EHBs, there's all these acronyms. I'll recap it again. What a QHP is,

Aaron Miller (06:05)
Yeah.

Matt Allen (06:06)
is a qualified health plan. The QHP has to cover the 10 essential health benefits, which is known as an EHB.

Those are the things like maternity, preventative care, ambulance, hospital, surgery, psychiatric. There's 10 essential benefits, all with the idea that it provides something called minimum essential coverage. And a lot of people will hear the term minimum essential coverage, MEC. And because of the way it's phrased, and because the government has stamped these plans with minimum essential coverage, so many people believe.

Unless I have this, I don't have health insurance, which couldn't be further from the truth. We have been manipulated. The terminology has been carefully constructed to make you believe unless you have minimum essential coverage, you don't have health insurance coverage. And to be perfectly blunt, right out of the gate

Only fifty percent of our clients actually have minimum essential coverage by the letter of the law. I don't have minimum essential coverage. You I know you don't have minimum essential coverage. Whole bunch of our clients don't have minimum essential coverage, but you know what? Their finances are absolutely protected in the event of a healthcare situation, and they have much better coverage than if they would have gone with one of these qualified health plans. So

I know you asked me to speak briefly on it. I'm not really good at that. There's a little bit of the history and the details

Aaron Miller (07:46)
Ha.

Matt Allen (07:47)
on the medical medical.

Aaron Miller (07:51)
Yeah. And one of the things I hear as well is, you know, major medical people associate it with the major brands. Right? It's a plan that's, you know, run and administrated by an anthem, United Healthcare, an Aetna. And you know, that's what they think of when they think health insurance. They think brands. And so major medical, while it means a lot of things to a lot of people.

I think that's just what they think their work plan is, right? In a lot of cases it is, major medical. So now that we have major medical as a you know kind of umbrella topic, comprehensive, catastrophic, it's kind of funny to think major medical and comprehensive are now the same thing when as you said initially that was not the case.

And so when someone is looking for major medical, how do you navigate that conversation to reframe in a lot of ways their understanding of what a plan that financially covers them looks like?

Matt Allen (09:04)
Sure. So when I talk people through this situation, there's very few of them that are super married. You can't move off the idea that they want a major medical plan. They want something that is like stamped with that on the policy. More so what people are looking for is what that definition of major medical is to them. And so

We just kind of break down, well, Mr. and Mrs. Smith, I understand you want a major medical and I can absolutely show those to you. But what I wanna understand fully to make sure it's the right product for you is what what does major medical mean to you? And sometimes they'll say and they'll list off, you know, some of the ten essential health benefits. They need this, they want this, they this, they want this, they want this. I'm gonna show them.

The Affordable Care Act, minimum essential coverage plans. I'm going to show them all that stuff. But then I'm going to put it side by side with something that is more like the classic major medical health insurance plans that existed years ago. They still exist today. And we're going to show them that yes, that all those 10 essential benefits, they can be covered. And this is the price, this is the deductible. And the scariest part of these plans, this is the net.

This is where you can actually use it. But if we go over here behind door number two and we look at something that I would deem if we if we took off the legal you know, Department of Insurance definitions of what major medical, qualified health plan, minimum essential coverage, all that. If we instead just zoomed out a little bit and said, What what logically does major medical mean? Major medical means I'm covered for the big stuff.

That's the best way you can use insurance, any type of insurance, is to avoid a catastrophic loss and to not have it pay for these little dinky dunky things, like a doctor visit or an urgent care visit or going to the pharmacy. So I zoom them out and I say, if you want actual major medical coverage, if that's what you're actually concerned about, it's a surgery, a hospitalization, a disease, an injury, an emergency room, an ambulance, those types of things, well then you don't need this qualified health plan.

These 10 essential health benefits, these minimum essential coverage. What you actually need is a major medical health insurance plan that can't be called a major medical health insurance plan anymore. But I can show it to you. That's the type of insurance I have, that's the type of insurance Aaron has, that's the type of insurance half of our clients have. It doesn't have that stamp on it, though, that says major medical, because by the legal definition, that means it needs to be a qualified health plan that covers the 10 essential health benefits that is minimum essential coverage.

And then we're back into that rat race of it's gotta cover all these things. Well, the majority of people don't need all those things covered. And you can save a ton of money and get a better network and a better deductible in premium if you go over here.

Aaron Miller (12:11)
Yeah, absolutely. And so when some people are thinking major medical, they're thinking my PPO, my work plan PPO. When I retire, I want that work plan PPO. That's my major medical framing. They can't get that on the individual side. And so what do people do when they want to mimic

the major medical they had through their job.

Matt Allen (12:45)
Well, you've been in this business with me long enough, Aaron, to know if we could mimic people's work plans on the individual side, we would already be retired. If we could sell that plan, we'd be millionaires because that's all anybody wants. They just want to take whatever they had at work and just go buy it on the individual market. The issue with that is that that plan doesn't exist. That

And the Blue Cross Blue Shield, that Aetna, that Cigna, that United Healthcare PPO that you get from your job. Part of the benefit of working at that job, the reason it's called benefits, is that you have access to a plan like that. That in your mind, because you've worked there for decades, is what major medical health insurance is. That's what it is to you. But you don't realize, I hate the thrown around the word privilege, but I don't know how else to say it.

How privileged you are to even have access to that plan. Because when we go to the individual side, when you retire from your job, I can't tell you how many people have prepped me for my call with them to go over their health insurance options and they feel the need to send me their work plan. I understand what you had

Aaron Miller (14:03)
Yeah.

Matt Allen (14:03)
at work, Mr. and Mrs. Jones, but I'm here to let you know.

That plan doesn't exist, or this could have just been an email. That's why we need to hop on a call. And that's why we need to actually talk about this. Because the options out there, good, bad, or otherwise, the Affordable Care Act changed the entire landscape for individuals by forcing all these major medical health plans to cover these 10 essential health benefits and to be minimum essential coverage. Well, now these health insurance plans.

These major medical qualified health plans on the individual market because they have to cover pre-existing conditions right away, because there's tax credits available, because they're covering so many things, good, bad, or otherwise, these health insurance companies are still in it to make money. Okay? And so how are they going to control their costs? Well, they can't deny people coverage.

They can't keep people out of, you know, they can't do medical underwriting. There's no waiting periods. They have to cover everything right away. And I put that in quotes because the way they control their costs, these ACA plans, these alternatives to health insurance, these major medical health insurance alternatives from when you leave your work plan, the way they make money, and the way they can control their costs is by limiting who you can go see for your health care and what things are approved.

what drugs are approved. So they have to cover your condition, but they don't have to cover it just any way you want it to be covered. So that's the limitation there is we're bringing

Aaron Miller (15:34)
Yeah.

Matt Allen (15:34)
in this HMO network, this EPO network, this POS network, and that's not to say there aren't PPO ACA plans out there. Those exist, but they're going to be much more expensive than your work plan, much higher deductibles, and the biggest hidden

cost of all those is your out-of-network care. The reason you like your PPO major medical from your work so much is because you've probably never walked into a doctor's office and them kind of look at you funny because of your health insurance card. You've never been told we don't accept that.

You don't realize how good your PPO network is. The PPO stands for Preferred Provider Organization. That means there's an organization of providers that they prefer you go to. They'll give you a lower deductible, lower copay. Perfect. But the hallmark of the PPO is that even if you're outside the network, you still have coverage. You still get care. And on the work plan, your out of network deductible is still really good. It's still low.

So you can go to the Mayo Clinic for that brain tumor. You'll pay a little more because it's out of network, but you're still covered.

You go to the ACA, you go to where the other major medicals are. Once you leave work, you go to where these qualified health plans are. You're looking at an HMO, health maintenance organization, no coverage outside the network. You're looking at an EPO, exclusive provider organization, no coverage outside the network. Or you're looking at a POS, which is exactly what it sounds like. It's called point of sale, which might as well be called the other thing. And it kind of tells you it's got a little coverage outside the network, but they're very limited.

you are going to experience a shift, even if you use the same exact company, even if you had blue cross blue shield PPO through your job and you move to Blue Cross Blue Shield HMO EPO POS or even the Blue Cross Blue Shield PPO on the marketplace.

All of these are going to have limited networks, limited benefits, and managed care because these insurance companies are trying to still make money and that's how they can control their costs. And so if you want to avoid all that, that's where door number two comes into play.

Aaron Miller (18:02)
Right. So door number two is not only stepping away from the ACA altogether, but also adding supplements around these ACA plans, because as you mentioned, 50% of our clients are on the ACA. And so you can, I guess, mimic is a a high standard, but try to replicate their work plan PPO.

By adding these supplements.

Matt Allen (18:35)
Absolutely. Yeah.

Aaron Miller (18:36)
Is that the right way to look at it? Yeah.

Matt Allen (18:40)
I get passionate about this not because I disagree with the ACA. I wouldn't put hundreds of people per year on an Affordable Care Act plan if I didn't think it was a product they should they should be in. The blind spot of the ACA, though, while it will cover pre-existing, it will cover the 10 essential health benefits.

Is that you have insurance for the unknown. That's the primary reason anyone should buy insurance. You buy life insurance because you could die at any moment and you don't want your family to have a huge financial burden. Disability insurance, you buy that because who knows, I could have a horrible accident and not be able to work anymore. Auto insurance, homeowners insurance. That's how those work. Health insurance.

has been transformed in a lot of people's minds to I just need to make sure my doctor takes it and my prescriptions are covered. That's it. That's what I need my health insurance to do. And while I'm not belittling needing that stuff covered too, but the real reason you should have health insurance is what if I get that diagnosis? That unexpected diagnosis? What if I do get into a bad accident and I need a hundred thousand dollars worth of surgery

And physical therapy. What the ACA is going to do is it has to cover those things that I just listed. It has to. That's part of the 10 essential health benefits. But it doesn't have to approve how you want to get it done, where you want to get it done, and by whom you want to get it done. That is the hole in the ACA. So if I have an early retiree who's got pre-existing conditions or an expensive medication or needs to see this certain specialist.

I'm going to take them to the ACA and we're going to optimize for that. We're going to optimize for what they know they need it for right now. I can do that. I can help with that. But the reason you have health insurance is for the unknown to. And so what we do is we wrap around, we add these supplements to the ACA to protect your finances in case you want or you need to seek medical treatment outside of that restrictive ACA network.

And the most effective way to do this for our early retirees is if they're able to control their income upon retirement. Maybe they're living off savings, maybe they're taking Roth distributions, maybe they're just below the adjusted gross income threshold to receive an ACA tax credit. If we can get them their doctors and their prescriptions in the local hospital covered and get them a tax credit and add the supplemental.

In case they want or need care outside the network, they now have something that does mimic their major medical PPO they had through work, because now they're covered no matter where they want to go, and their pre-existing is covered due to the ACA plan and dialing in the network. And that total cost of a subsidized ACA plus the supplement is typically about half the price of Cobra. And it's something they can take.

longer than 18 months or Cobra has the 18 month cap. And so that is a very effective strategy for some of our early retirees to more so make their plan the type of major medical they're thinking it is in their head.

Aaron Miller (22:18)
Yeah, absolutely. And so I think the main conversation we're having here is major commedical means something different to everybody. So when you Google it, you're probably gonna get the standard definition, right? The plans that are considered major medical. But when you actually go and look at the plans available, what you have in your head and what is available are going to look very different if you peek under the hood.

And so that's where having an expert in your corner, knowing where to find the right education, can be a huge benefit to any early retiree.

Matt Allen (22:58)
Yes. And this is not to shame anyone or tell anybody they're they they don't know what they're doing or they can't figure it out. But I can't tell you how many early retirees we've seen who have a blue cross blue shield PPO with a four thousand deductible through their job and they go to the marketplace and they find a blue cross blue shield plan and they try to get it as close to a four thousand deductible as possible and they think perfect.

I've solved it. Check health insurance off the list. And then they go to use it, and it doesn't work anything like they're used to. Their doctor they've been going to for twenty years doesn't take it. Their dermatologist they've seen for the last eight years because they got a weird mole they're checking in on, doesn't take it. Their OBGYN, we're not in network with that. Because to the early retiree, they've never shopped for health insurance, they've always had Blue Cross Blue Shield. They assume

They're interchangeable.

But it's the network that matters. Blue Cross Blue Shield has over 30 different networks nationwide. So a doctor's office that simply says, Yeah, we take Blue Cross Blue Shield, that'd be like an ice cream parlor saying, Hey, what do you want? And you say, Ice cream. They we got that. Well, which flavor? Which flavor do you have? Which network do you have? That's gonna determine whether or not your insurance is actually accepted there. And so having an extra set of eyes and somebody who's been doing this for a decade.

Helping these early retirees helps point out those blind spots that they don't even know existed. They don't know what they don't know. And that's not a fault of theirs. It just severely puts not only their health care at risk, but their finances at risk. They retired early because they were very responsible stewards with their money, and they have a certain amount they've saved that they're gonna live on. Well, if a huge medical expense comes up that isn't covered by your health care insurance, what are you gonna do then?

How does that affect your early retirement strategy? Let's make sure we're dialed in on that. Use the help of an expert. It doesn't cost anything. I get paid by the health insurance companies, whatever you pick, contracted with all of them. And let's dial this in and let's make sure your finances are protected against the health care catastrophe until you get 65. Once you're 65, Medicare, get a plan G, get a Part D, you're home free.

We just gotta bridge that gap and we've gotta make sure there's nothing unexpected.

Aaron Miller (25:35)
Absolutely. So Major Medical means a lot of different things to a lot of different people. What does it mean to you? What are you looking for? I think the answer that we would hear from a lot of our clients is get me safely to sixty five. That that is the derivative of major medical. Just get me safely to where I need to go.

Matt Allen (25:58)
Mm-hmm.

And safe doesn't mean low premium, optimize out of pocket max, and HSA eligible. We can factor those things in. But get safely to 65 means the unknown is covered as well.

Aaron Miller (26:21)
Yeah. Absolutely. That's what I have. Matt, any other pieces of major medical advice?

Matt Allen (26:31)
Definitely no medical advice. Major medical advice. Have an open mind when it comes to the individual market. Certain products are there for a reason. And if you understand them and you utilize them, they can be a much lower cost and higher benefit. It just might not look like what you're used to. So a plan like I have or a plan like Aaron has, you know.

I kind of wear it as a badge of honor that it's not technically minimum essential coverage or a major medical because it's better. It's an alternative to the ACA. And the ACA has gotten so expensive for so many people and so restrictive for so many people. There's still success stories. We still have half our clients on it.

But that number is diminishing and more people are going over to door number two, where you can get no network-restricted health insurance policies. There's some caveats there, there's some drawbacks, no doubt about it. but if you have an open mind, you can save a lot of money and get a lot better coverage if we're willing to walk away from this major medical preconceived notion that a lot of people stick to.

Aaron Miller (27:43)
Absolutely. What

Matt Allen (27:44)
All right.

Aaron Miller (27:45)
do we have today?

Matt Allen (27:47)
This has been another episode of Talking of course, is an acronym for Straight Health Insurance Talk. I am Matt Allen.

Aaron Miller (27:55)
I am Aaron Miller.

Matt Allen (27:57)
Thanks for your time.

1. What does “major medical” health insurance mean?

People often use “major medical” to mean comprehensive health insurance or protection against large medical expenses. In this episode, Matt and Aaron discuss why it’s important to clarify the benefits you want and examine the actual policy instead of relying on the label.

2. Can I get the same health insurance I had through my employer when I retire?

Individual coverage may differ significantly from your employer’s plan. Even if you choose the same insurance company, the provider network, deductibles, prescription coverage, and out-of-network benefits may be different.

3. Does my doctor accepting an insurance company mean they accept all its plans?

No. A doctor may participate in some of an insurer’s networks but not others. Confirm that your doctor accepts the specific plan and network you’re considering before enrolling.

4. Can supplemental coverage help address gaps in an ACA plan?

Matt and Aaron discuss using supplemental products alongside ACA coverage to help with certain expenses. What a supplement pays depends on its benefits, exclusions, and limits, so it’s important to understand how the products work together.

5. What should I compare when choosing health insurance before Medicare?

Look at premiums, deductibles, out-of-pocket limits, provider networks, prescription benefits, and coverage restrictions. Consider your current medical needs alongside unexpected care, travel plans, and the number of years you need coverage before Medicare.