All Medical is not Major

September 5, 2018 § Leave a comment

I’ve seen a few agreed judgments and PSA’s lately that have provisions along these lines:

“[Father] shall maintain major medical, optical, and dental insurance covering the minor child … “

When I inquire, I am told that what the parties intended was actually a standard health-insurance policy along with the optical and dental insurance.

There’s a huge difference between a “major medical policy” and a “health insurance” or “medical insurance” policy.

The term “major medical” is a term of art in the insurance industry to specify insurance designed to cover medical expenses due to severe or prolonged illness by paying all or most of the bills above a set amount. Many major medical policies are cheaper than a regular health or medical policy. They are designed to kick in over and above what regular health and medical insurance covers.

So a major medical policy would kick in, for example, after your health insurance has paid out, say, $50,000 for cancer treatment, and only then would major medical start paying up to some contracted limit.

A health or medical insurance policy, by contrast, pays a percentage (usually 80%) of covered medical, hospital and surgical expenses. It is not limited to severe or prolonged illness, and there is no threshold coverage amount other than a deductible or co-pays.

Remember that the judge is bound by the language you use in that agreed judgment or PSA. If it says “major medical,” it doesn’t matter what the parties thought they were getting; they are bound by the terms they used.

Consider what could happen if Junior breaks his arm and spends the night in the hospital with only a major medical policy in force. The bill is $8,000. But the major medical policy covers only catastrophic illness, such as cancer, and only after the expenses are in excess of $20,000. Problem? You betcha.

And don’t expect any relief from the judge. That’s what the parties agreed to get.

Be careful with your terminology. Your client will have to live with it.

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