What Is Supplemental Insurance?

by | Dec 24, 2019 | Supplemental Insurance

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When most people think of supplemental insurance they think of Medicare Medigap plans. My focus here is the other types of supplemental insurance being sold in the U.S. The following supplemental policies are available directly from an insurance company and/or may, be available as a voluntary benefit from your employer.

Common Types of Supplemental Insurance

Hospital Indemnity Insurance 

Aka hospital confinement insurance pays a cash benefit directly to you. If you are confined to a hospital due to an illness or other serious injuries the cash benefit is paid. Either in one lump sum or weekly/monthly installments. There may be a waiting period prior to benefits being paid. Like other types of supplemental insurance, hospital indemnity coverage is meant to help you pay for goods and services not covered by your health plan.

Accidental Death Policies

There are two types of accident policies. Accidental Death and Dismemberment (AD&D) and accident health insurance. They are often bundled and sold together. The benefits may vary from state to state. AD&D policies pay you a lump-sum cash benefit if you are the named beneficiary of someone who died in an accident. They may also pay if the person did not die but lost an appendage, their eyesight, or suffered permanent paralysis. AD&D insurance will not pay for any deaths related to illness, suicide, or natural causes.

Accident medical insurance, aka an accident hospital indemnity policy, pays for medical costs resulting from an accident. But only that portion not covered by your regular health insurance. Policies may also pay for extended home care services and travel and lodging expenses for family members. Accident supplement policies are popular with healthy people who have high-deductible health insurance plans. They defray upfront premium costs but provide a backup plan in the unlikely event of a catastrophe.

Critical Illness or Disease-Specific Insurance

These policies are meant to ease the financial burdens accompanied by a serious illness such as cancer, heart attack, or stroke. These policies pay a lump-sum cash benefit directly to you to help pay for costs related to your illness, but not covered by your health or disability plan. Depending on the specific policy, the coverage can be used to pay for: experimental treatments, childcare, travel and lodging, deductibles, out-of-network specialists, and normal everyday living expenses.

Dental and Vision Coverage

Most commercial health insurance plans (outside of Medicare Advantage Plans) do not cover routine dental and vision care for adults in the U.S. The ACA requires individual and small group plans to provide coverage for pediatric dental and vision services. This can be done by adding the coverage into a health plan or offering it separately. You can purchase a separate plan that covers dental and/or vision care in the private market. Employers often offer this as an option for employees, with the employee paying a portion of the premiums.

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