Supplemental (also known as secondary) health insurance is used to complement your health insurance and fill any holes in coverage. There are several different types of supplemental insurance plans, many of which are targeted to specific health issues.
Whether your health insurance is provided by your employer or you bought your own individual health insurance plan you may not be too familiar with supplemental insurance, because you’ve never thought that you needed it. Well, that is until you open that bill from the doctor’s office only to see that a recent service was not adequately covered by your plan.
No matter the scenario, supplemental health insurance can be instrumental to you or your family’s healthcare coverage.
So What Is Supplemental Health Insurance?
Think of supplemental health insurance as mini insurance plans that you add on top of your regular health insurance. Basically, supplemental health insurance is an added layer of protection used to cover what a traditional health insurance plan does not.
Some forms of supplemental health insurance can cover some out-of-pocket expenses left in the wake of regular—or primary—health insurance plans. These can include copayments, coinsurance, and deductibles. Supplemental plans will pay out either periodic benefits or a lump sum of cash to the customer. This money can be used to pay for lost wages, transportation, medication, or anything else resulting from an injury or illness. Just as with normal health insurance, there are a lot of things consumers need to know about supplemental insurance.
Types of Supplemental Insurance
As is the case with traditional health insurance, there are many different types of supplemental insurance.
Also called a ‘hospital indemnity plan’, this kind of insurance will provide coverage for hospital stays. The national average for an inpatient, single day hospital stay is more than $2,000, so hospital insurance can prove to be a worthwhile investment.
Accident insurance pays lump-sum cash benefits if you are injured in an accident. This type of supplemental insurance can help you pay medical costs and living expenses while you are healing.
Covered expenses often include surgery, emergency treatment, hospital confinement, and physical therapy.
Critical Illness Insurance
Also called ‘critical care insurance’, this type of supplemental insurance provides coverage for illnesses such as cancer, major organ transplants, strokes, heart attacks, kidney failures, and more.
Some types of critical illness insurance plans are specific to one particular type of illness or disease. If diagnosed, you may receive cash benefits paid per procedure or round of treatment. There is often a minimum daily benefit as well as a policy maximum. And always check for a recurrence rider.
Disability insurance helps retain some of your income if you become too sick or injured to continue working. Some disability plans pay out benefits only for an illness, while others pay for illness and injuries. Think the Aflac duck!
Other Types of Supplemental Insurance
Fixed Indemnity Insurance
Out-of-pocket expenses can get out of control after an illness or injury. A fixed indemnity plan can help you manage those expenses with cash benefits paid directly to you.
Preventing lasting damage to your teeth and gums is essential to your long-term health, not to mention your smile. Some health insurance plans include dental coverage, but because dental is not one of the required benefits of the ACA, the majority of plans do not. Dental coverage for children, however, is a required benefit and comes standard with all ACA-approved plans.
Dental insurance works just like health insurance with monthly premiums, copayments, coinsurance, and deductibles.
Preventive care for your eyes and prescription eyewear is not covered under normal health insurance terms. But benefits like these, and even laser eye surgery, can be acquired through vision insurance.
Most vision insurance plans provide services at discounted rates in exchange for a monthly premium.
Metal Gap Insurance
A metal gap plan helps fill the gaps left by metal level health plans (bronze, silver, and gold). It can help you manage deductibles, coinsurance, and copays. This type of plan may come in handy for those who have lower premiums but higher deductibles and other out-of-pocket expenses.
Why You Need Supplemental Health Insurance
Regardless of the type of health insurance plan you have, there are probably going to be copays, deductibles, max out-of-pocket expenses, etc. You can pay these yourself or you can have insurance pay for it all.
True story: two guys in my office, 57 and 62 were diagnosed with colon cancer around the same time. They used the same hospital and had the same surgeon, both are now cancer-free and healthy again. However, the 62 yo had a cancer policy, the 58 yo did not. The 62 yo received a payout of $40,000 after the diagnosis was confirmed. His health insurance paid for most of the bill, and his $40K paid for his deductible and out-of-pocket expenses with almost $30K left over.
The 58 yo had deductible and out-of-pocket expenses of over $10K which he had to pay himself. I know because I was the 58 yo!
Just a little forethought can provide you and your loved ones with peace of mind!