The essence of getting health insurance is to have the peace of mind that when medical challenges come calling, your finances won’t be strained. But health insurance is a pact between the insured and the insurer. Both parties hope to get the most out of the contract. Which is why a health insurance plan isn’t a blank check. The insurer will not cover just about any medical cost as that could see them collapse under the weight of obligations. There are limits. These limits can prove detrimental in your greatest hour of need.
Enter supplemental plans. This is a health insurance cover that’s taken in addition to an existing plan and is meant to cater for healthcare costs the main insurance policy doesn’t take care of. Supplemental plans may pay out-of-pocket costs (coinsurance, copayments and deductibles), or provide a cash benefit at the end of a given period for use in addressing expenses related to a health condition or injury.
Supplemental plans take many forms and may either be purchased directly from an insurance company or offered as a voluntary benefit by employers. Here are some of the more common examples.
1. Medigap
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Medigap is one of the best examples of a supplemental insurance plan. It takes care of part or all out-of-pocket expenses (coinsurance and deductibles) you incur under Original Medicare. These expenses can add up pretty fast especially if you are hospitalized or if you require skilled nursing facility services.
If you have Medicare but not Medigap, there’s no predicting just where your out-of-pocket expenses will stop. Note that Medigap is an Original Medicare Supplement plan and therefore cannot be combined with Medicare Advantage since Medicare Advantage caps your out-of-pocket costs.
2. General Supplemental Plans
General supplemental health plans work in much the same way as a regular plan. The main difference is that they kick in once your primary cover is exhausted. They are usually listed as a secondary insurer on medical forms. General supplemental plans offer a cash payout based on what was not covered by your primary insurer.
As an example, say you visit the hospital and your main insurer takes care of everything but a $2,500 deductible. If you don’t have the health savings needed to cater for this expense, the supplemental insurance cover will pick up the entire tab.
3. Vision and Dental Insurance Plans
Vision and dental care is often not included in health plans in America. Original Medicare and most private health insurance plans exclude routine vision and dental treatment and procedures. If you want medical insurance for your eyesight and teeth, you’ll have to enroll for a separate plan.
Many employers will offer this supplemental option to their workers with the employer paying a part of the required premium. For individuals who don’t have access to an employer-sponsored vision and dental plan, supplemental coverage is available in the private insurance market.
4. Critical Care Insurance Plans
Also known as critical illness insurance or disease-specific insurance, this supplemental plan is meant to blunt the financial impact of a serious medical condition such as cancer. The policy may provide a cash benefit to pay the additional costs associated with the disease but that don’t qualify for your regular disability or health plan.
The specifics of what the plan pays for will vary from policy to policy but would usually involve deductibles, travel, lodging, childcare, household assistance, out-of-network specialists, experimental treatments and the living expenses disrupted by the sickness such as groceries, utilities and car payments.
If you have a genetic predisposition to a serious illness (like a family history of breast cancer) you should consider taking out a critical care cover for that condition.
5. Travel Insurance Plans
The majority of insurance plans will take care of medical expenses incurred when you are outside your home area but within the same country. Once you cross the country’s borders though, your health insurance’s reach diminishes dramatically. This is especially so if you are visiting a developing nation where not only is health infrastructure severely constrained but there are fewer players your home insurer can work with.
Suffering a serious medical emergency when overseas can easily bankrupt the average traveler. Think about the cost of treatment overseas where scarcity of good hospitals and competent doctors means high quality services are prohibitively expensive. Add to that the cost of transportation back home in instances where using a commercial airline would be out of the question. Evacuation alone can run into the hundreds of thousands of dollars.
Travel insurance covers the cost of missed connections and lost luggage. However, it will also take care of any medical expenses that aren’t covered by your home health insurance plan.
6. Accident Plans
There are two types of accident plans—accident health plans and AD&D (accidental death and dismemberment) plans. They are regularly combined as a single plan and are popular with persons who have a high-deductible low-premium plan who want a fallback plan in the event of a catastrophic accident. The benefits of accident plans will vary depending on each state’s regulations.
Accident health plans (also known as accident medical insurance or accident hospital indemnity policy) pay for the medical costs following an accident that aren’t covered by your primary insurance plan. The costs here may include home care, and family lodging and travel.
AD&D policies pay a lump sum to a named beneficiary in the event of the policy holder’s death by accident. The plan may also disburse smaller amounts if the individual didn’t die but suffered a severe injury such as permanent paralysis, a lost limb or lost eyesight. AD&D plans do not cover death by natural causes, illness or suicide.
While supplemental health plans have many advantages, it’s important to remember that they are not intended to replace your regular plan. Rather, they pick up the slack in areas where your primary plan falls short.
