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Supplemental Health Insurance Plan

No matter how good your health insurance is, even if you have the best out there, there are still out-of-pocket costs your insurance will not cover. Supplemental health insurance is additional insurance you can purchase to help you pay for services and out-of-pocket expenses such as co-pays, deductibles, and co-insurances your regular medical insurance does not cover.

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What is Supplemental Insurance?

Supplemental insurance refers to any additional insurance coverage that you have alongside your primary health insurance. 

Supplemental policies provides additional coverage beyond what is offered by a standard health insurance policy. This coverage can be used to pay for medical expenses that are not covered by your primary health insurance policy, such as deductibles, co-payments, and co-insurance. It can also help cover the cost of treatments that are not covered by your primary insurance policy, such as acupuncture or physical therapy.

These plans can help reduce the financial burden caused by serious illnesses or accidents. For example, if you are hospitalized for three days, the cost of treatment could be several thousand dollars, which would typically be covered by your primary health insurance. 

With a supplemental insurance policy in place, you could reduce your out-of-pocket expenses to a few hundred dollars, as the policy will help cover the additional costs.

What is Medicare Supplement?

Medigap, also known as Medicare supplemental plans, are a type of supplemental insurance that provide additional coverage beyond what is covered by Medicare. With Medicare Part A (hospitalization) and Medicare Part B (medical care), you are typically responsible for paying 20% of your healthcare costs, but with a Medigap plan, these costs can be reduced or eliminated.

Medigap plans are only available to individuals enrolled in original Medicare and are categorized into plans A through N, with each letter indicating the level of coverage and associated cost of the plan.

 

Types of Supplemental Insurance

Supplemental Health Insurance provides you with a cash benefit paid out over a period of time or given in one lump sum. You can use the cash benefits to cover lost wages, transportation costs related to your health condition, rent or mortgage, childcare, or even to pay for food, medication, bills, and other everyday and unexpected expenses you have due to an illness or injury.

Here are brief descriptions of popular supplemental plans and factors to consider when choosing one.

  • Fixed indemnity plan: Suitable for individuals with high-deductible health plans to help pay for medical expenses.
  • Hospital insurance: Ideal for those with ongoing health conditions.
  • Accident insurance: Best for individuals at high risk of injury, such as athletes.
  • Critical illness insurance: Appropriate for seniors or those at high-risk of specified illnesses.
  • Long-term care insurance: For individuals planning for the high costs of aging.
  • Supplemental life insurance: Provides extra financial protection for family members in case of death.
  • Accidental death insurance: Suitable for those with high-risk jobs.
  • Disability insurance: Protects against sudden loss of income.
  • Vision insurance: Good for most people who want an annual eye exam and discounted lenses.
  • Dental insurance: Ideal for most people who want regular cleanings and discounted dental care.
  • Orthodontic insurance: Suitable for those who anticipate needing braces.

These Supplemental Plans help pay for bills

These Supplemental Plans help you prepare for death or disability

These Supplemental Plans Provide Add-on Benefits

Why do you need supplemental health insurance?

Your health insurance deductible and out-of-pocket maximum are greater than your savings account.

Typically, a health plan’s annual deductible ranges from $1,000-$7,900 and includes more than $7,900 in out-of-pocket limits. If this is greater than your savings account, then you need a supplemental health insurance plan to pay for expenses you cannot cover.

A recent study showed that 63% of Americans do not have enough money in savings to cover an unexpected $1,000 medical event. If you are one of these people, then you will most likely end up using a credit card to pay for unexpected health expenses, borrow from a family member, or take a high-interest second mortgage on your assets.

 

You don’t have enough savings to cover daily expenses if you are unable to work due to injury/illness.

21% of Americans do not even have a savings account. (Google Consumer Survey of more than 5,000 adults for personal finance website GOBankingRates.com.) If you have no savings, your family will face a wide financial strain if the financial provider of the family encounters an injury/illness putting him/her out of work.

What are the Benefits of a Supplemental Health Insurance Plan?

  • Offsets the cost of medical treatment: A supplemental health insurance plan can help offset the cost of medical treatment, making it easier to manage the financial impact of an unexpected health event.

  • Covers unexpected expenses: A supplemental health insurance plan can help cover the cost of medical expenses that are not covered by your primary health insurance policy, such as deductibles, co-payments, and co-insurance.

  • Provides peace of mind: Knowing you’re better prepared for the unexpected costs of medical treatment can provide you with peace of mind and reduce the stress associated with medical emergencies.

  • Offers flexibility: Supplemental health insurance plans come in a variety of forms, so you can choose a plan that best suits your needs and budget.

Cost of Supplemental Plans

Supplemental insurance policies are usually less expensive than full insurance policies because they only offer additional coverage, not full coverage. The price of supplemental insurance can vary widely, ranging from less than $10 a month to more than $500 a month, depending on various factors such as policy type, age, health, gender, location, and smoking habits. 

While some policies have consistent premiums, others have premium increases each year. Age is typically a major factor in determining the cost of the policy, with older people generally paying more. When evaluating the value of a supplemental insurance policy, consider all costs, including deductibles, copays, and coinsurance, which contribute to the overall cost of the policy.

Things you should consider when choosing a Supplemental Health Insurance:

It is important to assess your savings, medical condition, types of coverage you have and what you can afford before you make a decision to buy supplemental health insurance.

Take into account your family medical history if there is a higher than usual chance of common diseases such as cancer, heart disease, or diabetes. Keep in mind, statistics show us there is still a high chance of nonhereditary cancer and heart disease, a well as risk of accidents so getting supplemental insurance is still a smart financial decision.

If you were hospitalized for a couple of weeks or more, would you have enough in your savings account to cover expenses your primary health insurance would not? Do you have a Health Savings Account (HSA) or a Flexible Spending Account (FSA) you can access when emergency strikes? These sorts of questions should be asked when considering fund-related matters that could save you from future financial strain.

The goal is to have the cheapest and most effective supplemental insurance available. Numerous employers provide disability insurance as standard employee benefits with a much lower rate. Government programs such SSID (Social Security Disability Insurance) offers disability benefits if you meet their minimum work requirements. So, if you already have disability insurance, you may just need to add critical illness, hospital indemnity, or accident to prepare for medical out-of-pocket expenses. You can choose from a variety of plans and benefits based on your budget.

There is nothing worse than expecting coverage, only to have it cancelled because you missed a payment and you end up with unexpected expenses. It is more important to get started with small supplemental insurance coverage than nothing at all. Start with what you can afford before it is too late.

How does supplemental health insurance pay?

  1. Depending on which supplemental health insurance you are enrolled in, you can file a claim when you receive a diagnosis of disability, cancer, heart attack, or if you are injured in an accident.
  2. You will need to fill out a form and submit your claim to your insurance carrier. Provider’s notes may be required.
  3. Receive a check. You have the freedom to use this check however you want.

Take note:

Supplemental insurance is not intended to be stand alone insurance or to replace your regular health insurance, hence the word “supplemental,” which means “in addition.” Some like to refer to it as “secondary health insurance” because it is a second insurance plan to your primary benefits or your first health plan. Health Plans in Oregon is here to help you make sure you fully understand the benefits with a consultation at no cost to you.

Where can you buy supplemental health insurance plans?

Typically, supplemental health insurance plans can be obtained through your employer. Consult with your benefits administrator or HR representative to find out the available benefits. If your employer doesn’t offer a specific benefit, it may be possible to buy supplemental coverage directly from insurance companies.

Who Should Consider a Supplemental Health Insurance Plan?

Anyone who is concerned about the cost of medical treatment should consider a supplemental health insurance plan. This is especially true for people who have high deductibles, co-payments, or co-insurance under their primary health insurance policy. A supplemental health insurance plan can help reduce your out-of-pocket expenses and provide you with the peace of mind that comes from knowing you’re better prepared for the unexpected costs of medical treatment.

Is supplemental health insurance worth it?

Supplemental health insurance can bring numerous advantages, including extra coverage and peace of mind. However, whether or not it’s worth it is a subjective decision that depends on several factors, such as: 

  • Your current and projected financial situation
  • Your health risks
  • Your age
  • The cost of supplemental insurance premiums
  • The amount and type of coverage you require.

Frequently Asked Questions

What is supplemental insurance?

Supplemental insurance is an additional insurance coverage that supplements your primary insurance, providing extra protection to help pay for expenses not covered by your primary insurance.

Who should consider supplemental life insurance?

Supplemental life insurance is ideal for anyone who feels that their current life insurance policy would not provide enough for their loved ones in the event of their death. Many supplemental life insurance policies can be added as riders to existing life insurance policies for a nominal monthly cost, providing added benefits. 

Is it possible to claim supplemental health insurance on taxes?

Yes. You can claim supplemental health insurance premiums as a medical expense on your tax returns if you pay for them out-of-pocket. If you’re under 65, the medical expense deduction must exceed 10% of your adjusted gross income (AGI) to affect your tax returns. If you’re over 65, the amount must be over 7.5% of your AGI to impact your tax returns.”

Need help? Call Health Plans in Oregon: 503-928-6918. Our assistance is at no cost to you.

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I GRANT PERMISSION FOR A LICENSED INSURANCE AGENT TO CALL OR EMAIL ME REGARDING MY MEDICARE OPTIONS INCLUDING MEDICARE SUPPLEMENT, MEDICARE ADVANTAGE, AND PRESCRIPTION DRUG PLANS . Not affiliated or endorsed by Medicare or any state or federal governmental agency. 

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