Being an Employee Benefits Insurance Broker, I often get the question “Why do I need Supplemental Insurance if I have good Health Insurance?” Well, the best answer is that if you have good insurance or bad insurance, your health insurance plan is going to pay doctors, hospitals, pharmacies, etc. Your health insurance company is not going to pay you. Normally a supplemental insurance policy will pay the policyholder directly, it covers out-of-pocket expenses and services that typically your health insurance does not pay for.
Some supplemental insurances will pay for out of pocket expenses such as deductibles, coinsurances, and copayments. Others may provide you with a cash benefit paid out over a period of time or in a lump sum. The cash can be used to cover lost wages, transportation related to your health condition, or used to pay for food, medication and other unexpected expenses you have due to an illness or injury.
The important thing to remember is Supplement Insurance is just a supplement. It by no means is meant to replace your health insurance. It is meant to enhance your health insurance plan.
Most common types of Supplemental Insurance policies sold are Accident, Critical Illness and Hospitalization. These are cash benefit plans and are typically made available through your employer by payroll deduction or you may purchase them independently through an Insurance Agent. Currently, our agency is offering these products through Assurant Health, Humana and Unum.
Accident: pays for medical costs resulting from an accident. Some of these policies will even cover your extended homecare services and travel and lodging expenses for family members.
Critical Illness: some policies will separate out the cancer and critical illness policies instead of lumping them together but they are one in the same in the fact that they pay due to a disease specific diagnosis. Both policies are meant to ease the financial burden of a serious illness.
Hospitalization: pays a cash benefit if you are “confined” to a hospital due to an illness or injury.
BE AWARE, although many of these supplemental coverages are fairly inexpensive duplicate coverage may be unnecessary. It is always good to sit down and review all of your current insurance policies with your agent prior to purchasing any new insurance. Here are a few questions to ask yourself if you are thinking you might need supplemental insurance:
- If I or a family member gets into a serious accident or develops a serious illness, will our insurance policy cover all costs for treatment?
- How likely is it that I or a member of my family will get into an accident or develop a serious illness?
- Does the extra cost of the supplemental insurance make sense over time?
Additionally, when purchasing supplemental insurance; it is important to understand the limitations and benefits. For example, it could impose benefit waiting periods or limits on how much the payments will be over a period of time or per accident/illness.
Before signing on the dotted line, just make sure you understand the benefits in full. Ask all questions. Remember there are no dumb questions when it comes to your insurance benefits!