- What is supplemental insurance?
- Why would I want to buy supplemental insurance?
- What forms of supplemental insurance are available?
- What is accident insurance, and how does it work?
- What is critical illness insurance, and how does it work?
- What is hospital indemnity insurance, and how does it work?
- What is hospital and doctor insurance, and how does it work?
- What is dental insurance, and how does it work?
- What is vision insurance, and how does it work?
- What is life insurance, and how does it work?
- What is travel medical insurance, and how does it work?
There’s no denying it — health care in America is expensive. In 2022, health care costs in the United States totaled $13,493 per person. It’s no wonder that 1 in 10 Americans have significant medical debt, including 3 million people who owe more than $10,000.
Having health insurance is important for keeping your health care costs down. But even with comprehensive coverage, you can still end up paying a lot of money out of pocket.
You might want to consider supplemental insurance. Below, we’ll explain what supplemental insurance is, the types that are available, and what they cover.
Supplemental insurance is optional insurance you can buy in addition to your health plan’s coverage. Think of it as an extra layer of protection on top of your other insurance policies. Sort of like wearing a hat and putting on sunscreen to protect yourself from the sun.
There are many types of supplemental insurance. Some help cover the costs of things such as accidents, illnesses or hospital stays. Others cover care that may not be covered by regular health insurance, such as vision and dental services.
Depending on your plan or the state you live in, some types of supplemental insurance pay your provider, but many pay you directly. And sometimes, depending on your state, you can spend the money you get however you want, not just to cover medical bills. Dealing with medical emergencies is stressful enough.
Do you have questions about supplemental insurance plans? Get more details now, or call a licensed insurance agent at 1-844-211-7730 to discuss your options.
You share the cost with your insurance company through copayments (fixed dollar amounts) or coinsurance (cost-sharing percentages). For example, you might owe $25 for a doctor visit (copay) or 20% of the bill for a hospital stay (coinsurance). Depending on what plan you have, you may have to pay a deductible before your insurance kicks in for certain health services.
Even with health insurance, your out-of-pocket costs can become costly if you have an accident or need to stay in the hospital. Supplemental insurance can help you cover some of these out-of-pocket costs. That way, you can focus on recovery instead of worrying about bills.
“A lot of people will get a high-deductible plan, and they’ll get the supplements to help offset that in case something did happen,” says Dawn Freeland, owner of Freeland Insurance Solutions in Portage, Michigan. (A High-Deductible Health Plan, or HDHP, is a type of health insurance plan that has a higher-than-normal deductible.)
The other factor is whether the services you need are covered under policies you already have. For example, adult dental and vision care aren’t usually covered by health insurance. If you need dental work or glasses, a separate dental or vision policy can come in handy (you can also get the 2 policies paired together).
“There are options available for people to lessen their financial responsibilities,” says Eric Starke, director of Starke Financial Services in Fort Lauderdale, Florida. “It’s just a matter of choosing the right plan that’s in your budget.”
These are the most common types of supplemental insurance:
- Accident
- Critical illness
- Hospital indemnity
- Hospital and doctor
- Dental
- Vision
- Term life
- Travel
According to the National Center for Health Statistics, accidents lead to 24.8 million doctor visits and 25.5 million emergency room visits each year. And those accidents can cost you a lot. For example, fixing a broken leg can cost up to $7,500.
Accident insurance can help cover your costs if you’re in an accident. It helps pay for the injuries you suffer and services you get. Injuries covered may include:
- Burns
- Concussions
- Fractures
- Paralysis
Services covered by accident insurance may include:
- Ambulance rides
- Diagnostic services
- Doctor visits
- Physical therapy
- Some surgeries
- Time in the hospital
Accident insurance may also pay your beneficiaries if you die as a result of your accident.
For each injury or service, your plan will pay you a set amount based on the plan you choose, up to $2,500, $5,000 or $10,000, depending on the plan. All costs related to your accident are paid up to your plan limit. Suppose you have the $5,000 plan and you fall off your bike and cut yourself and break your arm. Your hospital bill, which includes cleaning and stitching your cuts, X-rays and setting the broken bone, is $3,700. You have to pay a $250 deductible and will receive $3,450 for the qualifying accidental injury.
What’s covered and how much is paid depends on the plan you choose. Be sure to go over the plan brochure for details.
A cancer diagnosis or a heart attack can upend your life in many ways. More doctor visits and procedures can mean more copays or copayments, and they could also result in loss of income due to time away from work. Critical illness insurance pays you a lump sum if you develop a qualifying serious illness.
This cash is yours to use however you want, even for things such as childcare, groceries, utilities or rent. So you can focus on recovery instead of stressing about expenses. And if you can’t work due to your illness, the payout from your plan can help keep you and your family afloat.
Illnesses covered can include heart attack, stroke, life-threatening cancer, organ transplant and coronary bypass. The amount paid might range from $10,000 to $50,000 or more, depending on the plan. Keep in mind that a plan will only cover certain illnesses, as outlined in its details, and often only covers the illness if it is the first diagnosis. There may also be other restrictions and limitations.
For example, you may be subject to medical underwriting, which means the insurer can try to figure out your health status and deny you coverage if you have a preexisting condition. So, if you were already diagnosed with cancer, you’d likely not be eligible for a critical illness insurance plan or coverage for cancer. Be sure to do your research when choosing a plan.
It’s important to keep in mind that critical illness insurance isn’t a replacement for comprehensive health insurance. The average cost of open-heart surgery, for instance, is $137,533 — which is far more than a critical illness insurance plan would cover. However, the critical illness plan can help you cover things like lost wages, travel expenses or other unexpected expenses that come with this type of illness.
Hospital stays, whether planned or unplanned, can be expensive. A 3-day stay in the hospital can cost $30,000 on average. Hospital indemnity insurance helps cover costs by paying you a fixed amount of money for each day you’re hospitalized.
Payments might range from $500 to $2,000 per day. If you’re in an intensive or critical care unit, your plan might pay an additional $500 to $2,000 per day. What you’re paid depends on the plan you choose and the state you live in. Limits may apply to how many benefits you get per year. There may also be other restrictions and limitations.
As with critical illness insurance, you can use this money however you want. “This money is paid directly to you, not the hospital,” says Starke. “And it’s free to you to do with as you please, because that’s your money.”