Supplemental insurance includes many various types of insurance policies that you have in addition to your main health insurance coverage. It’s meant to add an extra layer of coverage by helping people meet out-of-pocket expenses and other costs not covered by their regular insurance. Supplemental policies serve as secondary payers, filling in gaps in coverage and complementing regular health insurance coverage. It often helps to decrease costs associated with copays, deductibles, and other expenses depending on the extent of coverage.
What are some examples of supplemental insurance?
Some examples of supplemental insurance include fixed indemnity, hospital, accident, cancer, heart attack and stroke, critical illness, accidental death, disability, dental, and vision policies. While some offer a set reimbursement amount for certain treatments and pay your medical providers directly, others pay a lump sum of cash related to services covered under the policy that you can use to pay other expenses, such as your mortgage, utilities, groceries, and gas.
For example, some critical illness plans will pay you up to the full amount of the policy if you’re diagnosed with a qualifying illness that is covered 100% by the policy. You can use this money to pay for treatments, transportation, rent, utilities, groceries, and other things. This can help you financially and emotionally as you focus on recovering from your illness.
Some types of accident plans cover lower cost accidents that are fairly common, such as fractures, minor burns, and sprained knees or ankles. Other accident policies provide more catastrophic coverage for more major accidents.
One type of supplemental insurance plan that can provide protection for your income is disability insurance. Often referred to as “income protection insurance”, it can replace a percentage of your income when you’re unable to work due to an illness or an injury. Short term disability insurance typically starts paying benefits within one to two weeks of a qualifying illness or injury and covers you for a period somewhere between 13-26 weeks. Long term disability insurance policies often start 90 days after being unable to work due to an illness or injury and can last 2, 5,10, or 20 years, or even to retirement age.
What is the typical cost of supplemental insurance?
Since the types of supplemental policies and the coverage they offer varies so much, the range in costs is large. For example, some supplemental insurance policies can cost as little as $20/month, while others with much larger coverage amounts can cost hundreds of dollars. With nearly all of the policies, the older you are, the more the policy costs. However, it’s important to consider how a supplemental insurance policy might fill in large gaps in your medical insurance for a relatively low monthly cost.
Why should you buy supplemental plans?
Even robust health insurance plans carry deductibles, copays, coinsurance, premiums, and other costs that quickly add up, easily leading to thousands of dollars in uncovered bills. People frequently buy supplemental policies to offer added protection to their health plans, relying on the policies to provide an extra layer of assistance to help with regular health care costs.
Supplemental insurance has become even more important in an era of rising health care costs, decreasing health benefits, and more prevalent high deductible health plans (HDHPs). Due to these trends, people may be less protected against medical costs and a supplemental plan can help to decrease financial risk.
Would you like to learn more about how having supplemental insurance might benefit you? Schedule a free consultation to learn more!
Sources:
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Council for Disability Awareness
- Valuepenguin.com