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 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.
Types of Supplemental Insurance
Supplemental 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.
Short Term Disability
Disability often results in a loss of income. This policy will help supplement and pay for your living expenses and will provide cash benefits every week or month for a period of time while you’re disabled. It is usually about 60% of your gross income.
This policy provides cash benefits in case of accidental injury. Unless you tell us otherwise, the insurance company sends the cash benefits directly to you, and you decide the best way to spend it. This insurance is a simple way to stay ahead of medical and out-of-pocket expenses that add up quickly after an accidental injury; not only emergencies, hospital stays, and medical exams, but any expenses you face, such as transportation and lodging needs.
Hospital Confinement Sickness Indemnity
Help ease the financial burden of hospital stays due to illness with cash benefits from supplemental insurance. While the primary benefits of the policy pay for hospital care, there’s also a physician visit feature for when you are sick, have an accident, or just need a routine exam. Some of the policy benefits include hospital confinement, major diagnostic exams, surgery, ambulance transportation, etc.
Cancer statistics are constantly increasing. In the United States, men have slightly less than a one in two lifetime risk of developing cancer, and women have a little more than a one in three risk. (Cancer Facts and Figures 2012, American Cancer Society). This cancer-specific insurance policy is designed to provide you with cash benefits during insurance covered cancer treatments. It can also help protect your income and savings from expenses not covered by your major insurance including out-of-pocket expenses, out-of-network specialists, experimental cancer treatments, travel and lodging when treatment is far from home, childcare and household help, and even normal living expenses such as food, mortgage/rent, utility bills, car payments, cell phone bills, etc.
A serious health condition such as a heart attack, organ transplant, end-stage renal failure, or third-degree burns is not only a life-altering physical event but a devastating financial one as well. Critical care and recovery insurance can make all the difference by providing cash benefits as you concentrate on your recovery. Covered health events inlcude stroke, paralysis, coronary artery bypass surgery, persistent vegetative state, major human organ transplant, and coma.
Here are some key reasons why you need to supplement 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 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.
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 insurance.
Health risk factors
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.
Type of coverage you already have
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.
Amount of insurance you can afford.
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 insurance pay?
- Depending on which supplemental 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.
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.