What is supplementary health insurance? – Forbes Advisor

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Health insurance covers the cost of preventive care, surgeries, doctor’s appointments, prescriptions, emergency care, and more. Although many health insurance plans offer robust coverage, health insurance will not cover all the potential costs of an illness.

Supplemental health insurance can fill some gaps.

As the name suggests, supplemental health insurance is designed to “top up” existing health insurance plans. Supplemental plans do not replace health insurance. They can help pay for health care costs not covered by a plan or provide additional coverage for specific needs such as dental care, vision and long-term care.

How does supplementary health insurance work?

Supplemental health insurance fills the gaps in a traditional health insurance plan by providing coverage for certain expenses that you are responsible for. Supplemental plans usually do not cover medical treatment, such as surgeries or drugs.

Instead, a supplemental plan can help pay health insurance deductibles or co-pays, or pay for specific care, such as cancer or critical illness. Supplemental health insurance plans work differently than health insurance plans, but the specifics depend on the plan.

A supplemental policy like dental insurance can help you pay for your dental care. Or a policy such as critical illness insurance can give you a lump sum payment as reimbursement for out-of-pocket costs associated with your treatment. This money can be used for any purpose, including medical bills, transportation, childcare, food, or housing.

What are the types of supplemental health insurance?

There are numerous types of supplemental health insurance that can provide coverage in a variety of situations. You can purchase additional plans to supplement your group health insurance or private health insurance policy. Cost and benefits vary by plan and provider.

Here are some of the most common supplemental health insurance plans.

Accident insurance

If you have an accident that is covered by an accident insurance policy, it can pay for expenses that your regular health policy excludes. Your injury must meet the qualifications based on the accident plan details. Broken bones, burns, concussions, and paralysis are just a few examples of covered conditions.

In addition, many accident insurance policies provide payout in the event of accidental death. If you die and your death is caused by an accident covered by the policy, a beneficiary of your choice will receive a lump sum payment similar to a life insurance death benefit.

Cancer insurance

If you are diagnosed with cancer, having an additional cancer insurance policy provides money that you can use for any needs. Cancer insurance benefits can be used to:

  • Additional payments
  • Self-participation
  • Transportation to and from chemotherapy appointments
  • Groceries
  • Paying rent or mortgage
  • Cancer treatment not covered by your health insurance

Critical Illness Insurance

If you are diagnosed with a qualifying critical illness, a supplemental critical illness plan can help you pay for out-of-pocket costs that your regular health insurance plan does not cover. For example, if you’ve had a kidney transplant, you could use critical illness insurance benefits to pay for your mortgage, groceries, or childcare while you recover.

Additional critical illness insurance usually covers many major illnesses, including:

  • Hit
  • Heart attack
  • Crab
  • Transplantation of organs
  • Coma
  • Loss of hearing, vision or speech
  • paralysis
  • Coma
  • Kidney failure

Dental and vision insurance

Most standard health insurance plans do not include dental or vision benefits. If you want coverage for dental or optometrist visits, consider supplemental dental insurance or a vision insurance plan.

Of all the additional insurance policies, dental and vision insurance are two of the most common. These policies cover preventative care (such as two dental cleanings per year) as well as other expenses, such as contact lenses or prescription glasses. Dental and vision insurance is usually relatively inexpensive and is sold by many health insurance companies.

Disability insurance

Disability insurance provides income replacement if you become disabled and unable to work. You can purchase supplemental short-term disability insurance or long-term disability insurance. The difference between the two plans is how long the insurance company will provide benefits.

To use disability insurance benefits, you must prove your disability, which often requires an examination by a doctor or medical professional. Depending on the disability insurance plan, you may choose to receive compensation on a weekly or monthly basis. You will stop receiving replacement income when your benefits end or when you can return to work.

Hospitalization insurance

Although traditional health insurance plans cover hospitalization, your plan may not cover the entire stay. If your benefits run out, a supplemental hospital insurance plan can provide additional coverage for the portion not covered by your primary policy.

The average cost of a three-day hospital stay is roughly $30,000, according to the federal government’s Healthcare.gov. This can take a big chunk out of your wallet. Hospital insurance, also called indemnity hospital insurance, can help pay for hospitalization expenses.

Depending on the plan, hospital insurance may provide a fixed benefit for the entire hospital stay or may provide a certain amount of coverage for each day you spend in the hospital.

Long-term care insurance

Supplemental long-term care insurance helps cover the cost of long-term care services that may be needed if you are diagnosed with a chronic illness. Some of the costs that a long-term care insurance policy will pay for include:

  • Home health aides
  • Nursing homes
  • Assisted Living
  • Day care for adults

In order to use long-term care insurance benefits, you are usually required to meet certain criteria. For example, many plans will provide benefits when you cannot perform two of the six activities of daily living (ADLs), such as bathing, eating, or dressing.

How does supplemental health insurance fill in the gaps of health insurance?

The purpose of supplemental health insurance is to provide coverage for certain expenses that a traditional health plan excludes.

Even with the best health insurance plan, you’re still likely responsible for some medical expenses. Depending on the situation, a sudden medical diagnosis can cause financial strain. Supplemental health insurance plans provide payouts to ease the financial burden of these situations.

For example, imagine you get into a car accident and have a concussion. A typical health insurance policy would cover at least some of the costs of treatment, such as an MRI and an overnight stay in a hospital. However, if the concussion was severe enough to keep you from working for a month, disability insurance will provide income replacement during that time.

Supplemental health insurance plans are not intended to replace your primary health insurance policy. Your health plan will always provide more robust coverage for medical care, but having supplemental insurance can provide additional funds for the costs you would normally have to pay out of pocket.

How much does supplementary health insurance cost?

Most supplemental health insurance plans are less expensive than regular health insurance policies. However, the cost of supplementary health insurance depends on various factors, including:

  • Plan type
  • Location
  • Age
  • Insurance company
  • Benefits

The premium also depends on how you buy the plan. For example, if you get disability insurance through your employer, the premium will likely be subsidized. If you buy a private disability insurance plan, you pay 100% of the premium out of pocket.

When shopping for supplemental health insurance, it’s a good idea to get health insurance quotes from several different companies and compare them.

Frequently asked questions about supplementary health insurance

Is Supplemental Medical Health Insurance Worth It?

Supplemental health insurance is worth it for some people, but it depends on your current health, existing health insurance plan, financial situation, and what types of coverage you think you might need in the future.

For example, if your health insurance plan has weak benefits with significant out-of-pocket costs, purchasing a supplemental plan may be valuable. On the other hand, if you already have an excellent health insurance plan with good coverage and low out-of-pocket costs, you may find that an additional plan isn’t necessary.

Who Should Purchase Supplemental Health Insurance?

Supplemental health insurance can be a good solution for people whose primary health insurance plan does not offer stable coverage, or for individuals who want increased financial protection in the event of an unexpected medical diagnosis.

It can also be a good option for those who want increased health insurance benefits without having to buy a higher level medical insurance plan with a more expensive premium.