Do You Need Supplemental Health Insurance?

By Compuquotes Team on October 13th, 2008
Health Insurance

If you had an accident and were hospitalized tomorrow, could you cover all the deductibles, co-pays and lost income out of pocket without strain? Chances are that even if you have excellent health insurance, an unexpected hospitalization or medical emergency could hit you hard in the pocketbook. Supplemental health insurance can help cover the gaps that your standard health insurance policy leaves open, as well as provide cash for living expenses and replace lost wages.

How is supplemental health insurance different than standard health insurance?
Standard health insurance policies pay your doctor or health provider for services provided to you. You may be responsible for a co-pay or a deductible, and your provider typically handles all the insurance paperwork. Your health insurance benefits go directly to the health care provider.

By contrast, supplemental health insurance policies typically pay you a fixed amount for specific incidents when you use health care services. For example, if you slip and sprain your ankle, your standard health insurance policy will pay your doctor's bill, but you will still be responsible for the co-pay or deductible. Your doctor's office will bill your insurance company for its money, and bill you for any excess. If you have a supplemental health insurance policy that pays out $50 for a doctor's visit, you can make a claim on your policy and the insurance company will send you a check for $50 which you can use toward the deductible or co-pay, or put toward other expenses.

What benefits can I get under a supplemental health insurance policy?
The benefits to which you are entitled under a supplemental health insurance policy depend on the individual policy. There are many different types of supplemental insurance policies, each designed for different purposes. Some, like the well-known Aflac, are meant to help cover expenses that typical health insurance policies leave lacking by paying you cash when you have to visit the doctor, are hospitalized or are out of work because of illness or injury. Others are designed specifically to help with prescription costs, or to pay benefits for catastrophic illnesses or disabling accidents. Some are strictly hospitalization polices, and some designed to pay for long-term care. Many supplemental health insurance policies are designed specifically to help cover the gaps left by traditional Medicare health insurance.

Who should carry supplemental health insurance?
Supplemental health insurance is not a necessity for everyone, but it can help protect you financially if you are not prepared to meet unexpected medical expenses. Typically, you should consider supplemental health insurance if you are self-employed, on Medicare, have small children or are financially unprepared to deal with large medical bills or time off from work due to illness or injury.

What kind of supplemental health insurance is best for me?
The best supplemental health insurance policy is different for each person, and will depend on your specific needs and circumstances. For a young family, for instance, a supplemental insurance policy that pays benefits for wellness care can be enormously helpful, as can a hospital indemnity policy that will pay out a cash benefit if a parent is unable to work because they are hospitalized or out of work due to illness. Older adults should consider whether a long-term care policy or a supplemental policy that pays out a lump sum for catastrophic illness will be useful. Older adults and families may also find that a prescription benefit plan is essential to meet medical expenses that aren't covered by Medicare and traditional insurance.

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