Which statement about Major Medical Expense plans is true?

Which statement about Major Medical Expense plans is true?

• A. They use deductibles and coinsurance
• B. They have unlimited lifetime maximum
• C. They cover only hospital costs
• D. They do not cover prescriptions

Answer: (A)

Major Medical Expense plans are built around cost-sharing with the insured: you pay a deductible first, then the plan pays a portion of covered expenses through coinsurance until you reach the plan’s out-of-pocket limit. That deduct-then-coinsurance structure is the defining feature of this type of coverage and explains why this statement is true. These plans are not limited to hospital costs; they provide broader protection for medical and surgical expenses, including physician services, labs, and other covered care. They also typically set a limit on how much you pay out of pocket each year, rather than offering unlimited lifetime coverage, and prescription drug coverage is commonly included or coordinated with a separate drug plan, rather than categorically excluded.

Major Medical Expense plans are built around cost-sharing with the insured: you pay a deductible first, then the plan pays a portion of covered expenses through coinsurance until you reach the plan’s out-of-pocket limit. That deduct-then-coinsurance structure is the defining feature of this type of coverage and explains why this statement is true.

These plans are not limited to hospital costs; they provide broader protection for medical and surgical expenses, including physician services, labs, and other covered care. They also typically set a limit on how much you pay out of pocket each year, rather than offering unlimited lifetime coverage, and prescription drug coverage is commonly included or coordinated with a separate drug plan, rather than categorically excluded.