Supplemental Health Insurance Overview
If you are diagnosed with a serious illness or are involved in an accident, traditional health insurance programs such as Medicare and Workers' Compensation may not pay for all the services you need.
Are you prepared financially if something did happen to you? Supplemental insurance might be provide that answer. As its name implies, supplemental insurance provides you with another layer of protection, on top of existing policies you probably already have, such as health and life insurance. It can help you pay for care and services existing policies may not cover.
Supplemental insurance is similar to other lines of insurance - such as life or health insurance - but it is not meant to be your only means of protection. While major medical or life insurance policies can provide the bulk of benefits to your family after an illness or loss, supplemental insurance benefits can be used to pay for unexpected out-of-pocket expenses.
Types of Supplemental Insurance
Supplemental insurance policies include coverage for:
- Heart disease
- Disability Income
- Hospital Indemnity
- Medicare Supplement
Supplemental insurance such as cancer and heart disease policies fall into two main categories. There are those that provide a one-time lump-sum benefit and others that are expense-based.
Accident and hospital indemnity policies are typically indemnity-based; in other words, the policy will pay specified amounts for certain covered conditions or injuries.
Medicare Supplement policies in most states fall into 12 standardized plans. They are designated by the letters A through L. Plans F and J may also be offered in high-deductible versions. Plans K and L provide for different cost sharing and may have lower premiums. Medicare Select policies are similar to Medicare Supplement polices except that they have lower premiums and certain network restrictions.
Medicare Supplement Plan A offers basic benefits. Plans B through J offer additional specified combinations of benefits such as skilled nursing co-insurance, Medicare Part A and B deductibles, Part B excess charges, foreign travel emergency, and at-home recovery.
Note: Not all options are available in all policies or in all states.
What to Consider
You may want to consider supplemental insurance if:
- You have primary health insurance, and
- You are not financially prepared to pay for care that may become necessary due to a major illness or accident.
When considering supplemental insurance, be aware of the following:
- Supplemental insurance is not intended to take the place of primary health insurance.
- You may be eligible to purchase a Medicare Supplement policy if you are eligible by reason of age for Medicare Parts A and B. In some states you may be eligible by reason of disability.
- Medicare Supplement may be combined with other health insurance coverage such as long-term care or specified disease but not with another Medicare Supplement policy.
It is also important to know that your health may be evaluated in the application process. There are factors that determine whether or not you will be approved for a policy. They can also impact the rates you will pay. These include:
- Your height/weight
- Your age
- Any medical conditions you may have
- Any treatments you may have had
- Any medications you may be taking
There is an exception to the above. During Medicare Supplement open enrollment, a health questionnaire may not be required and policy issue is guaranteed. This open enrollment period lasts six months. It generally starts on the first day of the month in which the applicant is both age 65 or older and enrolled in Medicare Part B. Some states have additional open enrollment periods. There may also be other provisions for guaranteed issue.
Keep in mind that benefit and premium amounts vary depending on the standardized Medicare Supplement plan selected. Products may not be available in all states.