Supplemental health insurance is additional insurance that people purchase to help them pay for out-of-pocket expenses that are generally not covered under regular insurance. In other words, supplemental health insurance is a healthcare plan covering anything above and beyond minimum essential medical coverage. Some of the supplemental insurance plans pay for out-of-pocket medical expenses like deductibles, copayments, and coinsurance, whereas other supplemental health plans provide a cash benefit that is either given in a lump sum or over a period of time. The amount received from this plan can be used by people to cover lost wages, transportation related to their health condition, or to pay for food, medication, and other unexpected expenses occurring due to an illness or injury.
Few Examples of Supplemental Health Insurance Plan
Some of the popular Supplemental health insurance plans include:
- Accident insurance
- Adult Dental insurance for adults
- Vision Insurance Plans
- Disability Insurance
- Travel Insurance for coverage when people are outside their health insurance network
- Critical Illness Insurance
- Long term care insurance
- Short term health insurance coverage
- Medicare or Medicaid Supplemental Plans
Reason to Opt for Supplemental Health Insurance
Supplemental health insurance, also known as gap insurance, is used to plug any financial holes in the people’s healthcare coverage, allowing them to pay the high-cost of received medical care. Many working Americans have only modest savings, and hence they are at significant risk. Three out of five people might have to borrow money to pay their exorbitant medical bills, so a supplemental health insurance plan was designed to allow these people to offset rising out-of-pocket medical expenses. The rising out-of-pocket medical expenses can occur due to the popularity of high-deductible health plans and because of reimbursements falling short of the total costs spent on the diagnosis and treatment of a major illness.
Besides covering a big medical charge, there are some other good reasons to opt for supplemental health care insurance.
High Deductible – If health care plan taken by people have a high deductible and its cost exceeds their regular, ongoing cash-on-hand savings, then they should opt for supplemental healthcare insurance. It has been proved through Bankrate data that only 40% of the Americans are able to pay a $1,000 emergency cost. Therefore, by having supplemental health insurance, people with limited personal savings can also pay a high health care bill.
Need cash for ancillary expenses – Supplemental health insurance can also prove to be a big help for people who are unable to meet their expenses like child care or day-care expenses due to being ill for a month or two. People in these situations can avail of the cash from their supplemental health plan to meet such ancillary expenses.
If out-of-work medical leave is not covered by your employer – If people become ill or injured, and are unable to work for some time, then supplemental health plans can save them from depending upon credit cards or bank savings to handle additional healthcare costs. This will give them sufficient time to get better and get back with the job without facing a financial hit.
Senior people who are unable to afford Medicare costs – Medicare beneficiaries are well aware that the Medicare plan doesn’t cover everything. Therefore, seniors by paying a few dollars per day can avail supplemental plans to handle their excess health care costs.
How Does a Supplemental Health Insurance Plan Work?
Supplemental health plans are designed to pay benefits to the insured when their regular health plans do not pay for other expenses. The total amount paid and how it is paid depends upon the type of supplemental health insurance plan or policy is obtained by the people. The four primary supplemental health plans and how they work to offset unexpected medical expenses are described below:
Accident Insurance – This supplemental health plans complement major health insurance, and provide benefit to cover accidental injuries that require immediate treatment, urgent care, or hospitalization. This supplemental plan will prove beneficial for all such people who have active recreational lifestyles, or who are involved in playing different sports, as they are more likely to get hurt. Thus, such people should consider getting this coverage.
Cancer Insurance – It is also a type of supplemental insurance plan, complementing health, and disability insurance. This plan provides benefits specifically for a cancer diagnosis, or for cancer-related treatments, medical procedures, or screenings. This plan should be bought by the people having a family history of cancer.
Critical Illness – This supplemental insurance plan complements health and disability insurance. This plan provides a lump-sum amount that can be used for the diagnosis of major, and chronic illnesses like heart attack, Alzheimer’s disease, diabetes, stroke, and Parkinson’s disease. This supplemental plan can be a good choice for older people having a family history of serious illnesses.
Hospital Indemnity – This supplemental insurance complements major health insurance plans and provides benefits when people for a covered sickness or injury are admitted to a hospital or intensive care unit (ICU). This supplemental plan should be obtained by people who have very little personal savings and are expecting a hospital stay in the future.