What Does Supplemental Health Insurance Cover?

Supplemental health insurance can help with the medical costs that your regular health insurance plan may not cover — such as expensive events, like accidents, or preventive care, like dental cleanings and eyeglasses.

Supplemental health plans are designed to complement major medical policies rather than replace them. 

Before buying supplemental health insurance, you’ll want to consider what the plan covers, how much the plan costs, and if you expect to use the benefits.

What is Supplemental Health Insurance?

The average American pays more than $1,000 out-of-pocket for healthcare each year. With rising costs, many people choose to purchase an additional health insurance policy as a complement to their regular comprehensive health insurance plan.

Insurers offer a wide variety of Supplemental insurance options. Some of the most common types are accident, hospital, critical illness, dental, and vision.

Supplemental plans can help you pay for medical expenses that your regular policy may not cover, such as deductions and co-payments. You can also purchase supplemental plans to cover vision care and dental costs. Some additional plans will reimburse you for meals, travel, medicine, and lost income due to an accident or injury.

Buying Peace of Mind
If your tolerance for risk is low, an supplemental health insurance policy — to cover accidental injuries, for example — may be worth the cost of the additional financial protection.

What Does Supplemental Health Insurance Cover?

Supplemental plans come in many varieties. Here’s a look at some of the care that might fall under supplemental insurance coverage:

  • Serious illness. Critical illness insurance policies typically pay benefits for events such as heart attack, cancer, organ transplant, coma, renal failure, or stroke.
  • Accidents. Accident insurance policies vary but may cover injuries like car accidents, trips, and falls, or travel accidents. They may also provide benefits in case of paralysis or loss of a limb or eyesight.
  • Hospital stays. Policies that cover critical medical procedures pay a lump sum for hospital stays and may offer set benefit payouts for things like emergency room services, ICU treatments, ambulance services, X-rays, and lab tests.
  • Dental visits. Dental plans typically cover most of the costs of preventive dental care, such as routine annual exams and cleanings. Often, they also cover a percentage of the costs of basic procedures — such as fillings — as well as major ones, such as periodontal treatments, root canals, and crowns.
  • Orthodontics. Certain types of dental insurance will cover part of the cost of braces, although this may be limited to children under the age of.
  • Eye exams. Typically, vision insurance will cover a significant portion of costs for exams, eyeglasses, corrective lenses, and contacts. A vision policy may also offer discounts on laser vision correction procedures, such as LASIK.

How Does Supplemental Health Insurance Work?

Most supplemental plans work like other health insurance plans — you receive care and you (or your healthcare provider) submit a claim for reimbursement. Like traditional health insurance, supplemental health insurance typically requires you or your employer to pay a monthly or annual premium. Depending on the plan, you may also need to pay deductibles, coinsurance, and copays for certain services. Sometimes, your primary insurance will cover part of a healthcare cost and your supplemental plan will cover the rest.

At the same time, supplemental plans are not a substitute for comprehensive health coverage. They provide limited benefits for specific preventive treatments or health conditions, often up to a predetermined amount. In some cases, supplemental policies will pay you a fixed lump sum directly. You’ll sometimes hear these policies described as benefit plans rather than insurance plans, as they often are only set up to cover certain costs.

Who Should Consider Buying Supplemental Health Insurance?

If you are looking into purchasing supplemental health insurance, you’ll want to consider several factors:

  • Plans offered by your employer. If you have health insurance through work, look at what supplemental plans are offered. Some employers may even pay part of your premiums.
  • Services that aren’t covered. Check your primary insurance or short-term plan’s explanation of benefits. Are there services that you anticipate needing that aren’t covered? 
  • Your deductible. A family enrolled in a high-deductible health plan (HDHP) may be required to pay up to $14,000 before the plan begins paying its share.If you’re enrolled in an HDHP, supplemental insurance may protect your savings and help you budget. This is sometimes called gap insurance. (Note that this is distinct from Medicare supplemental insurance, also known as Medigap, for those enrolled in Medicare.)
  • Your risk tolerance. As with many insurance decisions, your comfort with risk, as well as factors like age, income and number of dependents, may come into play when weighing different options. You may decide that a particular supplemental policy isn’t worth it, or you may look at it as valuable peace of mind.

When buying supplemental insurance, check to see what the plan covers. Read the policy documents carefully and make sure you understand the limitations and exclusions (what the plan won’t cover) and how it will work with the benefits of your primary insurance.

What are the Common Types of SupplementalHealth Insurance?

Here’s a look at some of the most common types of supplemental health insurance.

Critical Illness Insurance
Typically, critical illness insurance pays a fixed amount if the insured suffers a major health condition such as a stroke, heart attack, organ failure, or cancer. While premiums can be relatively inexpensive, these policies are often very specific to the health conditions that are eligible for a payment.

Also known as disaster sickness insurance, this insurance pays out as a lump sum, which can usually range from $1,000 to $100,000, depending on the policy. You can then use the money to cover medical expenses that aren’t covered in your regular policy, as well as sickness-related expenses, including things like childcare, travel, groceries and mortgage payments, or rent.

Accident insurance
Accident insurance, also known as supplemental accident insurance or personal accident insurance, benefits you if you experience an accident or injury. Policies will generally exempt injuries caused by negligence, natural disasters, and natural disasters, or during activities deemed risky.

You can purchase accident policies together with other insurance policies or separately. Travel companies also offer certain, short-term accident policies, such as an accident policy when renting a car.

Accidental Death and Additional Accident Plans
Accidental death and dismemberment (AD&D) insurance pays you if you die in a covered accident, or if you lose a limb, hearing, sight, or speech. Insurers who classify AD&D as a type of life insurance sometimes bundle these plans with additional accident insurance that also covers less serious injuries.

Typically, AD&D policies give your beneficiaries a lump sum if you die in an accident, or pay you a set amount of cash if you experience dismemberment. The amount of payment and coverage vary depending on the type of policy.

Hospital Compensation Insurance
Hospital indemnity insurance pays a predetermined fixed amount for certain services specified in the plan. For example, a policy may pay you $1,000 for each day of hospitalization for surgery. These plans complement major medical policies to help cover additional costs such as deductions or other expenses.

Depending on the type of policy, hospital compensation plans may also provide benefits for certain types of laboratory diagnostics related to ambulance travel, extended care, and hospital stays. Typically, you can use the funds for anything you want, from medical costs to daily household bills.

Adult Dental and Vision Coverage
Many regular health plans do not cover dental or eye care costs. To cover some of these costs, insurers offer dental and vision plans as stand-alone policies or sometimes combine them into a single plan package. You may hear these plans described as a type of supplemental coverage, or your insurer may refer to them as dental or vision plans separately from other types of supplementary insurance.

According to the ADA, one in three adults in the U.S. does not have dental insurance. Still, routine preventative dental care, such as regular checkups and cleanings, can save you a significant amount of money in the long run.

Additional dental insurance usually covers most preventive care costs, including cleanings, periodic oral evaluations, x-rays and sealants, and some other procedures such as fillings, root canals, and crowns. Some additional plans can be added to existing dental insurance to provide benefits for procedures such as crowns or fillings.

Vision insurance offers benefits that help cover the costs of exams, eyeglasses, and contacts. And routine eye exams can provide early detection of serious diseases. When comparing plans, look carefully at the details to see what’s covered, especially if you wear contact lenses or need new eyeglasses regularly.

Children’s Dental and Vision Coverage
In many ways, children’s dental and vision plans are similar to those of adults. However, children’s dental plans are more likely to include braces and other types of orthodontic care, as well as sealants and fluoride treatments.

How to Register for Supplementary Health Insurance?

Policies available for purchase vary from state to state. However, you can usually sign up for an additional health insurance plan using one of the following methods:

  • Your employee. The human resources department at work can tell you if your employer offers additional policies or helps cover some of the bonus.
  • Individual purchase. You can purchase most types of additional policies directly from insurance companies by contacting an insurance agent or broker, or by searching for plans online. You can sign up for many types of policies at any time of the year, although waiting periods apply for certain services covered.
  • Associations. Member organizations such as the AARP or AAA or professional organizations in your industry may offer additional health insurance options.
  • Health Insurance Marketplace. Plans on the Marketplace may offer dental coverage. Registration may be limited to certain times of the year.
  • Medicare and Medicaid. If you have insurance through Medicare or Medicaid, certain types of plans in some states may offer dental or vision coverage.

How Much Does Supplemental Health Insurance Cost?

As with the costs of other insurance policies, the cost of supplemental insurance largely depends on factors such as your age, occupation, pre-existing health conditions, and location. Premiums also vary depending on coverage, limitations, and lifetime maximums. In a recent search between different plans, individual coverage for dental and vision insurance ranged from $10 to $80 per month. Other types of supplemental insurance ranged from $10-$150 per month.

Next steps

An additional plan may be a wise investment for people with great medical coverage looking to add another layer of financial security. Before purchasing any policy, do your research to make sure you understand the plan and what it covers and can afford it.

You will want to ensure that a plan complements your current coverage to provide the best possible care while giving you peace of mind.

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