Supplemental insurance is additional insurance you can purchase to cover services and out-of-pocket expenses not covered by your primary health insurance. Supplemental insurance is not a substitute for comprehensive health insurance. It helps cover areas not provided for in your major medical health insurance. While Major Medical health insurance plans are usually broad in coverage, supplemental plans are usually specific in their area of coverage. Some supplemental insurance plans help pay for out-of-pocket medical expenses, like copays, deductibles and coinsurance, while others may provide a cash benefit paid out over a period of time or in one lump sum. Benefits can be used to cover lost wages, transportation, medication, and other expenses due to an illness or injury. There are many types of supplemental health insurance and each policy is different. Some of the most common types of supplemental insurance are:
Examples of Supplemental Health Insurance Plans
Coverage provides a daily benefit for confinement to a nursing facility.
Original Medicare can often leave you with out-of-pocket expenses, but Medicare Supplement insurance can help cover these expenses.
Hospital Indemnity insurance can help you cover out-of-pocket expenses for hospital confinement when illnesses or injuries occur.
How do Supplemental Health Insurance Plans Work?
Supplemental insurance pays benefits to an insured. The benefit amount and how the benefit is paid depends on the particular supplemental insurance policy and the coverage selected. Many popular supplemental plans are also disease specific and offer coverage related to a particular disease such as cancer insurance.
Who Should Get a Supplemental Insurance Plan?
Whether or not you need supplemental health insurance depends on several factors. If you are under 65 or not enrolled in Medicare, you should start by evaluating your coverage under your current Major Medical health plan. If you are not satisfied with your current level of protection, you may want to consider a supplemental insurance plan. Supplemental insurance plans are optional and how much coverage you need is determined by how much your primary health insurance covers as well as the amount you are willing to pay for additional coverage. You should review your primary health insurance plan to see if you and your family are adequately protected. Supplemental health insurance can be beneficial to anyone looking for extra protection for healthcare related expenses.
Choosing the Right Plan
In order to choose the right supplemental plan for your needs, you should be aware of any out-of-pocket costs that come with each plan. Monthly premiums and yearly deductibles vary from plan to plan. Some things to consider when looking for the right supplemental insurance plan are:
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Costs– Making sure you understand copays, deductibles, hospital stays and other medical costs is one of the most important things to consider when shopping for a supplemental insurance plan. Some plans have yearly limits on what out-of-pocket expenses you will pay. Understanding all of the different costs and how they affect your coverage is one of the most important things to consider when comparing plans.
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Coverage– Understanding the terms of coverage is another important factor to look at when comparing supplemental insurance plans. How well does a particular plan cover the services you need?
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Current Coverage– Before comparing supplemental insurance plans, make sure you understand your current Major Medical plan or how coverage works with Medicare if you are enrolled. Knowing what is and isn’t covered by Medicare or your Major Medical plan is essential before choosing a supplement plan. Once you understand your current coverage, you can decide what areas you would like to add or increase coverage in.
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Quality of Care– Coverage and quality of care varies among providers. Knowing what level and quality of care you are looking for will help as you compare supplement policies.
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Prescription Drugs– Are you satisfied with your current prescription drug coverage? What will your prescriptions cost under each plan? If you are enrolled in Original Medicare, are you satisfied with your Part D coverage?
The Importance of Reviewing Benefits Every Year
Although it is suggested that you review your insurance coverage every year, many people do not know where to start because they are confused about what the benefits mean and how they apply to their needs. One of the reasons it is important to review your insurance coverage every year is lifestyle changes such as having children, getting married or retiring. Your needs today probably look different than they did five years ago. Evaluating your insurance coverage annually will allow you to address any changes in your life that may require changes to your coverage. When reviewing your insurance coverage, some additional points to consider are:
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Cost – You may be paying more than you should be. Plan premiums can change every year. Review your plan annually to make sure you are still satisfied with your level of coverage and premium costs.
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Big Changes – If you are getting married, having children, retiring or simply want to protect your income from any unexpected medical expenses, it is important to review your coverage and make sure your plan reflects your needs.
If you are enrolled in Medicare, it is also important to review your Medicare Supplement coverage before Medicare Annual Open Enrollment. Medicare Annual Open Enrollment is between October 15th and December 7th. Some reasons why you should review your Medicare Supplement coverage each year are:
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Premiums Change – Plan premiums are subject to change every year.
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Part D Coverage – Part D plans can make changes to the list of drugs they cover annually. It is important to review this coverage to make sure all of your prescriptions are covered.
Whether or not you decide to purchase a supplemental health insurance plan is up to you. Before you decide to enroll in a particular plan, think about the points mentioned in this blog and make sure you understand all of the benefits and limitations of your policy.
