Insurance Q&A with iCan Legal Counsel Michael Bertrand Esq.

Q: What is "major medical" insurance? How is it different from "Fixed Benefit" and "Short Term Medical" insurance? - Riley B., Cabot, VT

Hi Riley - that's a great question. When you're shopping for healthcare coverage it's important that you understand the different types of insurance that's out there so you can make a smart decision.

Major Medical Insurance Coverage is the most comprehensive health insurance that you can buy. The Affordable Care Act made big changes to health insurance in America, and now all new Major Medical policies must cover a number of essential benefits (including hospitalization and prescription drugs) and be "guaranteed issue." Guaranteed issue means that you cannot be turned down for major medical insurance because of a past or present health condition. There's also no lifetime or annual coverage limits, and many preventive services.

Comprehensive coverage can often have a high price tag, and many Americans find the monthly premiums for Major Medical to be out of reach. However, under the Affordable Care Act, many Americans will qualify for subsidies to help them afford those monthly premiums. A licensed insurance agent can provide you with information on those subsidies. Be aware that Major Medical coverage can only be purchased during the annual "open enrollment period," however, and the next open enrollment doesn't begin until late 2014. Unless you have a life changing event that qualifies you for a special enrollment period, you are unable to purchase Major Medical coverage outside of the open enrollment period.

Also, be cognizant that most Major Medical policies will limit you to a "network" of doctors, hospitals and specialists. If you seek care outside of that network, you may face unexpected out-of-pocket costs. Also, pay close attention to the deductibles and co-pays of any Major Medical policy, because when you need medical care you want to be able to access it!

Major Medical Insurance Coverage recap:

• Most comprehensive insurance available
• Covers many essential benefits such as Rx prescriptions, hospitalization, no coverage limits etc.
• You cannot be turned down for a past or present health condition
• Government offered subsidies
• Often limited to a "network" of doctors, hospitals & specialists
• Potential deductibles, co-pays and out-of-pocket costs

Fixed Benefit Insurance Coverage - sometimes referred to as Fixed Indemnity Insurance - is popular with consumers who are looking for more affordable coverage options and want the freedom to choose their own healthcare providers without being limited to a network. These plans operate differently than Major Medical plans - you may have to pay healthcare providers upfront, and then the indemnity insurer will reimburse you pursuant to the terms of the policy. Another big difference is that indemnity plans often have no deductibles; meaning you don't have to write a big check before the insurer begins paying benefits!

Many fixed benefit policies (but not all) are guaranteed issue, meaning you can't be turned down based on your health history. Some may impose a waiting period before pre-existing conditions are covered. Other insurers have limited underwriting, which means they still might cover your pre-existing condition. This type of coverage is available year round.

Be aware that these policies have fixed limits on what they pay - hence the same "fixed benefit" - and may not be the most appropriate choice for someone with significant pre-existing conditions, or someone that expects to incur substantial medical expenses in the near future. In such a case, you should investigate your Major Medical options, even if that means paying a higher premium.

Fixed Benefit Insurance Coverage / Fixed Indemnity Insurance recap:

• Can be more affordable, no deductibles
• Freedom to choose own healthcare providers
• You pay healthcare providers upfront
• Waiting periods for pre-existing conditions may be imposed
• Fixed limits on what will be paid
• Available year round

Short Term Health Insurance - also known as Short Term Medical Coverage - can provide you with coverage for less than a year (commonly 30 days to 6 months). These policies can be an attractive option if you are between open enrollment periods, or if your life is undergoing changes and you need some type of coverage until things settle down. With short term coverage, the insurer has the option of not renewing you, which means that these policies are best for short term use only (as the name indicates).

Short Term Health Insurance / Short Term Medical Coverage recap:

• Optimal for/when transitioning in life
• Can be activated very quickly
• Available year round

About the individual mandate: the Affordable Care Act requires that individuals have coverage that provides minimum essential coverage, and people without that coverage might have to pay a modest tax. Major medical provides minimum essential coverage, but fixed benefit and short-term policies do not.

Finding the right coverage at the right price can seem difficult. But it doesn't have to be. Talk to one of the licensed insurance agents at iCan, they'll help you find the coverage you need . . . at a price you can afford!