Know what kind of health insurance you’re buying

Before you buy coverage, understand the health coverage you’re considering, how it meets your needs, and if you are complying with the law.

Note: This page doesn't apply to insurance you get through your employer

Qualifying Major Medical Health Coverage

Insurance companies and health maintenance organizations (HMOs) sell major medical health insurance plans, which are sometimes known as comprehensive coverage or qualified health plans. There are three major types: HMOs, preferred provider benefit plans (PPOs), and exclusive provider benefit plans (EPOs). The Affordable Care Act requires you to buy major medical health coverage to avoid the tax penalty.

A plan isn’t a major medical plan if:

  • someone says, “this plan isn’t under the ACA;”
  • your plan doesn’t cover preexisting conditions;
  • your plan doesn’t include prescription drug coverage;
  • your plan term is less than one year;
  • your plan isn’t guaranteed renewable or if it has dollar limits on its coverage (guaranteed renewable means your insurance company can't decline to renew your policy without reason or just cause, even for health-related factors); 
  • you have several different policies – not one policy – that cover accident and sickness, surgical, prescription benefits, and emergency services.

When can you buy a major medical plan?

  • During the open enrollment period that runs from November 1 to December 15.
  • Outside the open enrollment period if you have a qualifying event, such as a job loss, divorce, change in family size, or involuntary loss of coverage. You also qualify if you are a victim of fraud or misrepresentation by an agent or company.

Other Types of Health Insurance

There are other types of health insurance you can buy together to provide some health benefits. These aren’t qualifying types of major medical coverage.

Short term major medical

  • The policy period is fewer than 12 months; it doesn’t cover preexisting conditions; and it isn’t guaranteed renewable.

Limited benefit health insurance, these are also known as:

  • critical illness policies;
  • hospital indemnity coverage;
  • other fixed indemnity coverage;
  • specified disease policies; and
  • accident only policies.

Supplemental health insurance

  • This is coverage that agents may only sell if it supplements a qualified health plan. It can’t be sold without having a qualified health plan.

These are examples of disclosures you might see on these non-QHP plans:

  • This policy provides limited benefits. Benefits provided are a supplement to major medical coverage and are not a substitute for major medical coverage or other minimal essential coverage as required by federal law.  Lack of minimal essential coverage may result in additional tax payment being due.
  • Note: this is a supplement to health insurance and is not a substitute for major medical coverage. Lack of major medical coverage (or other minimum essential coverage) may result in an additional payment with your taxes.
  • These products provide limited benefits. [Name of Plan] is not major medical or comprehensive health insurance and does not provide the mandated coverage necessary to avoid a penalty under the Affordable Care Act.

Learn more about qualified health plans on HealthCare.gov.



For more information contact:

Last updated: 05/18/2017