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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
This supplemental insurance offers a predetermined sum, known as an indemnity, to cover specific illnesses or injuries. The recipient can use the benefits however they choose to pay for associated costs.
For instance, the plan may pay $100 for an ambulance ride to the hospital or contribute $5,000 towards a heart bypass surgery that is primarily covered by the primary insurance policy.
It is important to note that fixed indemnity plans, like other supplemental insurance, are not enough to cover major healthcare expenses on their own. However, they can provide extra financial support to offset costs. For example, the plan may pay $150 per day for a hospital stay, which may not fully cover the cost of one day, but can help with some expenses.
In conclusion, these plans are suitable for people with high-deductible health plans or plans that have high copays and deductibles, such as catastrophic tier plans. They are also a good option for individuals with chronic health conditions who need financial assistance with healthcare costs. Costs: Fixed indemnity plans are relatively affordable, with some costing as low as $25 per month.
Hospital Indemnity Insurance, also known as Hospital Insurance, offers financial support when you’re hospitalized due to a sickness or injury. It typically provides a set payment to help cover related expenses, either in daily or weekly increments or as a lump sum.
In summary, these policies can be a smart choice for individuals with ongoing health problems or a family history of serious illnesses like cancer or heart disease. The cost of coverage varies based on the plan and level of protection, with options ranging from a monthly premium of $40 for a limited policy, to $94 for a more comprehensive plan.
Accident Insurance helps cover expenses incurred from an accident, such as emergency room care, hospital stays, medical exams, and other costs not covered by your main insurance provider. This type of insurance typically pays the policyholder directly, usually as a lump sum, allowing you to use the money for related expenses such as lodging or transportation. It covers various accidental injuries, including broken bones, sprains, burns, cuts, and paralysis, among others.
In essence, Accident Insurance can be a smart choice for those who participate in high-risk activities like sports, or those in high-risk jobs such as firefighters or police officers. The cost of coverage varies, with young and healthy individuals able to purchase a policy for as little as $6 to $20 per month, depending on personal risk factors and lifestyle. Older individuals, such as a 60-year-old, can purchase a policy for $33 a month with a coverage limit of up to $15,000 annually and a $100 deductible.
Critical Illness Insurance provides financial support for costs associated with specified serious illnesses like cancer and heart disease. These plans pay a lump sum upon a qualifying diagnosis as listed in the policy.
The lump sum can be used to cover a range of costs related to the illness, such as deductibles, copays, experimental treatments, child care, household assistance, and lodging if treatment is far from home. It’s important to note that these plans only provide coverage for the illnesses listed in the policy, and will not pay out for conditions not specified.
In conclusion, Critical Illness Insurance can be a valuable option for older individuals who have a higher likelihood of conditions such as heart disease, stroke, and cancer. The cost of coverage varies, with a 60-year-old paying approximately $210 per month for a policy with $50,000 in coverage, while someone in their 40s could pay between $54 to $65 per month for the same policy.
Long-term care insurance protects against the expenses that result from long-lasting, debilitating illnesses like Parkinson’s and Alzheimer’s. Conventional health insurance and government programs like Medicaid and Medicare do not provide sufficient coverage for long-term care, meaning you might have to pay for it yourself if you don’t have a long-term policy. Most long-term care insurance covers care provided in different settings, including your home, a nursing home, an assisted living facility, or an adult day care center. It usually starts covering care when you are unable to perform at least two of the six activities of daily living, like bathing, dressing, or eating.
It is estimated that 7 out of 10 people will need long-term care at some point in their life, but most people will not need to use their policy until they are in their 80s. It is recommended to wait until your 50s or 60s to buy a long-term policy, as paying premiums for decades before needing the policy is not efficient. On the other hand, waiting longer than 65 to buy a policy will result in higher premiums. A $100,000 long-term care policy can cost $89 monthly for a 50-year-old female and $106 for a 50-year-old couple, while a 60-year-old man may pay $261 a month for a policy with higher payouts if he takes out a rider that ties the policy increases to inflation.
These Supplemental Plans help you prepare for death or disability
A supplemental life insurance policy provides an additional layer of coverage and financial protection for you and your family. It is designed to supplement a standard life insurance policy, which may not provide enough compensation in the event of death, or even enough to cover funeral expenses.
Supplemental life insurance policies typically offer $25,000 to $500,000 in coverage, with some going up to $1 million. They offer higher coverage limits than standard life insurance because the policyholder, not the employer, pays the premiums.
These policies can be purchased from private insurers or as a rider or add-on to your existing life insurance policy from your place of employment.
Before buying a policy, it is advisable to consider how much financial burden your death would cause your loved ones, and whether your current life insurance policy is enough to cover these costs.
The cost of a supplemental life insurance policy varies depending on factors such as age, health, and others. A 35-year-old might pay $60 a month for a $350,000 policy, while a 70-year-old buying the same policy could pay over $500 a month in many cases.
Accidental Death and Dismemberment (AD&D) insurance pays benefits if you die or lose a limb in an accident. It is often added as a supplement to a life insurance policy but should not be relied on as a replacement, as it only covers death or injury from covered accidents, not natural causes or high-risk behaviors. AD&D policies are most suitable for those in high-risk professions like police officers and firefighters. The cost to add an AD&D policy to an existing life insurance plan is typically low, starting from around $6 per month for $100,000 in coverage.
This insurance pays a portion of your income if you are unable to work due to a severe injury or illness. Disability insurance provides benefits that are paid directly to you.
These policies provide protection against a sudden loss of income, making them appealing to families and individuals who are concerned about what would happen if they lost their main source of income.
The key difference between short-term and long-term disability insurance is the length of time that payments are made. Short-term insurance typically covers a portion of your income for a period of three to six months, or up to a year. Long-term disability insurance lasts much longer, covering a portion of your income for five to 15 years or more.
In summary, the primary earner in a family and those in high-risk professions should consider getting disability insurance. It is advisable to opt for long-term disability insurance if you can find a policy that covers 60% to 70% of your income, as long-term disability insurance lasts longer than short-term. Many employers of those in high-risk professions offer both types of insurance and contribute to paying for at least a portion of the premiums.
Costs: The costs of both short-term and long-term disability policies are similar, accounting for 1% to 3% of your annual salary, meaning the more you make, the more expensive your policy will be. Short-term disability insurance is slightly more expensive due to the fact that plans pay out faster and typically cover a larger portion of your salary.
These Supplemental Plans Provide Add-on Benefits
Dental insurance coverage encompasses routine dental exams, X-rays, fillings, and other treatments. Often, plans can be obtained through an employer, or one can opt for standalone dental insurance.
Getting regular dental check-ups can detect current and potential conditions and ultimately save costs in the long run. It’s important to note that traditional Medicare does not cover dental services, leaving many seniors uninsured.
In conclusion, dental insurance is a relatively inexpensive and advisable investment if you don’t have adequate dental coverage or if you and your family need more comprehensive coverage. Costs: Dental insurance premiums for individuals and families range from $12 to $60 per month, depending on the plan. For instance, a popular dental plan charges $21.99 per month for both individuals and families, with a policyholder deductible of $50 and a $150 deductible per family member added to the policy. The plan covers up to three additional family members, a total of four people. Many plans charge $40 for adult cleanings, $20 for child cleanings and less for dental exams, and more for fillings and other procedures. Some dental plans also have a three-month waiting period for fillings and procedures, and require a 12-month commitment from the policyholder upfront.
Vision insurance covers expenses related to eye care such as exams, glasses, contact lenses, and in some cases, corrective surgeries like Lasik.
Many policies offer routine eye exams without additional fees and can detect eye diseases or conditions early on, saving both lives and money.
In summary, vision insurance is an affordable option for those without vision coverage or those who need additional financial support for eye care costs. It’s especially beneficial for those who require corrective surgeries, although not all plans cover these procedures.
The monthly premiums for vision insurance for individuals are typically $12 to $15, while family coverage can cost around $36 per month. However, copays and deductibles can add to the overall cost. For instance, a typical plan may charge $10 for each eye doctor visit and $25 for prescription lenses, but offer a $100 frame allowance and a $115 allowance for contact lenses.
Orthodontic insurance can also be added to dental plans, typically from private vendors, if orthodontic treatment is required. Braces typically cost around $5,000, and orthodontic insurance typically covers 50% of the cost, reducing the expense of braces to $2,500. Many orthodontic insurance plans also offer lifetime benefits ranging from $3,000 to $4,000.
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?
- 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.
- You will need to fill out a form and submit your claim to your insurance carrier. Provider’s notes may be required.
- 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.”
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