Who Should Buy Supplemental Health Insurance?

There is no denying that healthcare is expensive, and at times, confusing — leaving many to wonder if they are fully covered, and if not, who should buy supplemental health insurance? Americans pay, on average, more than $1,000 out of their pocket for healthcare each year, and the older we get, the more that becomes. Middle-class Americans find themselves on the verge of bankruptcy trying to cover health care costs every day. We’re going into debt to stay healthy even with health insurance coverage. That’s where supplemental health care coverage comes in, and this article will address who should buy supplemental health insurance to ensure that they are fully covered.

Supplemental health insurance is healthcare coverage we can purchase in addition to our regular health insurance policy, whether you get it through your employer, Medicare or a private insurer. Supplemental insurance is designed to cover health care costs that extend beyond the coverage you’re already getting with your comprehensive health insurance plan, reducing what you may have to pay out-of-pocket when medical expenses arise.

Supplemental health insurance is beneficial for seniors as the frequency that health care costs come up tends to increase as we get older. Additional coverage buys us peace of mind and the assurance that we can afford to keep ourselves healthy, no matter what comes around the corner. Purchasing additional coverage can ensure that, even when we need health services more often, we are not depleting our retirement savings to get the treatment we need. Supplemental health insurance is a good choice for extending our quality of life with continued access to life-saving medication and services without breaking the bank.

Many different people in different stages of life can benefit from supplemental health insurance. Groups that might benefit from this extended coverage are:

  • Retirees and seniors - the older we get, the more health issues we encounter and the more associated costs we have to cover out of pocket.
  • People whose savings do not exceed their health insurance deductible.
  • Parents - if you have children, an unexpected illness could require you to pay for childcare services that may not be covered by your existing health insurance.
  • Workers who cannot afford to take time off due to illness or injury.
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Types of Supplemental Health Insurance

Supplemental health insurance is coverage that can pay for any health care costs that your regular health insurance plan may not cover. This form of insurance further reduces what you would have to pay out of pocket for medical attention and treatment beyond what your primary health insurance policy can cover. A supplemental health insurance plan may cover deductibles, copays and coinsurance, which can be a game-changer for those living on a budget, such as retirees. Even with good healthcare coverage, a medical emergency can be a costly event and deplete the money you have set aside for enjoying your retirement. Supplemental health insurance can protect your savings and reduce your out-of-pocket costs when you need unexpected medical care.

Insurance companies offer a variety of different supplemental health insurance types that serve several different purposes. The supplemental health care coverage type you choose should fill in where your primary health care insurance policy doesn’t offer coverage or requires out-of-pocket funding from you. Let’s go over some of the various types of supplemental health care insurance available:

Critical Illness Insurance

Critical illness insurance is a type of supplemental health insurance designed to alleviate the financial drain that comes with contracting a severe illness. For instance, when someone is diagnosed with cancer and faces a long road of treatments and side effects ahead of them, the cost can become unsurmountable. Medications, deductibles, experimental therapies, copays and countless other expenses can quickly sink even the most rigid savers. Critical illness insurance can offer a lump sum to cover any costs that aren’t already covered by your regular health insurance plan. You can use your payout to cover copays, out-of-network treatment, any deductibles your policy might require, travel and accommodation costs, childcare and more.

Critical illness insurance kicks in with specific diagnoses, so if you’re interested in purchasing this type of coverage, make sure you understand which illnesses are covered and how the policy is triggered. Those with a family history of critical illness or chronic diseases are prime candidates for who should buy supplemental health insurance. Nearly 2 million Americans are diagnosed with cancer every year, so this supplemental insurance can be immeasurably valuable to many.

Cancer Insurance

As we mentioned above, nearly 2 million Americans are diagnosed with some form of cancer every year — and those with a family history of cancer are a good example of who should buy supplemental health insurance for cancer, specifically. It’s scary to think about, but if it happens to you, you’ll want to know you can afford the best in care so you have the best chances to come out cancer-free. That is why another type of supplemental health insurance, cancer insurance, is so valuable. It is similar to critical illness insurance, except that this type of insurance policy is only triggered when the insured is diagnosed with cancer, specifically. Supplemental cancer insurance can cover the unique costs that can come after a cancer diagnosis and treatment begins. Your cancer insurance policy may cover everything that other types of supplemental insurance cover, such as copays, deductibles and coinsurance, but it can also cover the daily costs that come with being sick. For instance, you may use your payout to cover lost days at work, over-the-counter maintenance medication, transportation, or child care. It is also possible to use your cancer insurance benefits to cover the cost of experimental treatments, which can mean the difference between recovery and persistent illness. This possibility alone makes cancer insurance a sound investment beyond just protecting your savings and covering the costs of illness.

Accident Insurance

Another form of supplemental health insurance is accident insurance. Accident insurance comes in two forms of additional insurance. They are Accidental Death & Dismemberment (AD&D) and supplemental accident insurance. When you go looking to purchase either of these types of supplemental insurance, you’ll discover that they are often sold together as a package deal. AD&D insurance provides a payout to a beneficiary in the event the insured dies in an accident, loses a limb or an eye, or becomes paralyzed. Accident insurance is a form of supplemental health insurance that covers the costs associated with injury resulting from an accident. These costs can include your medical treatment, medications, travel, accommodations, child care and more, and your payout will be in the form of a reimbursement. Over 40 million Americans are injured in accidents each year, and these accidents can result in high health care bills, deductibles, copays, prescription drug costs, lost wages and the cost of childcare. While some employer insurances and other market place insurances offer accident coverage, those that do not should consider purchasing accident insurance. Highly active adults with outdoor, sports, and traveling hobbies are prime examples of those who should buy supplemental health insurance specifically for accidents. Insuring yourself with accident insurance is a great way to offset these potentially debilitating costs and can benefit people of any age and in good health.

Hospital Insurance

Hospital insurance is often referred to as hospital indemnity insurance or hospital confinement insurance. It is a type of supplemental health care insurance designed to offset the costs of extended hospital stays or specific inpatient or outpatient procedures and services. Your hospital insurance policy may list particular amounts for specific procedures. Still, more often than not, this form of supplemental health care insurance will pay out a lump sum when you are hospitalized, which you can then use as you see fit. Alone, hospital insurance doesn’t cover much, but as a supplemental policy to your regular health care insurance, hospital indemnity insurance can fill critical gaps that other insurance does not cover. You can use your hospital indemnity insurance payout to cover deductibles, copays, medication, childcare and lost wages. It is intended to bolster the health coverage you already have. Available to purchase independently or as part of a group plan through your workplace, hospital indemnity insurance is a great supplement to consider.

Fixed Indemnity Insurance

Another way to offset out-of-pocket costs when faced with costly medical events and conditions is to supplement our health care insurance with fixed indemnity insurance. Your fixed indemnity coverage can pay out a lump sum based on specific health care events. For instance, your fixed indemnity policy may include a payout upon admission to a hospital. You could also receive a specified amount for daily hospital coverage and intensive care unit coverage. Surgery could trigger a lump sum payout, as could an emergency room visit, transportation by ambulance and x-rays.

Fixed indemnity insurance will pay out directly to the insured rather than your healthcare provider. That means you can use your benefits to pay for anything you choose. This form of insurance is purely supplemental because, alone, fixed indemnity insurance can leave you susceptible to out-of-pocket costs that may be out of your reach in the event of any significant medical events.

Disability Insurance

Supplemental disability insurance is another form of supplemental health care insurance that you may be able to get through your employer’s group benefits. This type of insurance policy will protect you in the event you are unable to work due to a disability. Should you find yourself unable to work as a result of a disability, supplemental disability insurance can fill in the difference between what you might get from a regular long-term disability insurance policy and what you would need to maintain the current lifestyle you are used to.

Statistics show that only about 40% of all American households have enough saved to cover three months of their expenses without income, and only 28% of Americans have enough for six months. In 2019, it was discovered that 44% of bankruptcy filings were caused by loss of income for medical reasons. 5% of all working Americans will experience a loss of income due to temporary disability, which means that the risk is very real. Supplemental disability insurance will help you avoid this fate.

Your supplemental disability coverage could include more than just your salary. You may be able to recoup lost bonuses, incentives and other forms of income. This is an added layer of protection that can ensure that you will still be able to pay your bills and keep a roof over your head no matter what happens.

Dental and Vision Insurance

Original Medicare coverage will not pay out for vision and dental, which can get in the way of routine dental and vision care as well as treatment. Private health care insurance plans generally do not cover these services either. You can choose to take out supplemental insurance for dental and vision for your children and for yourself. Adult dental and vision insurance fills in where other health plans don’t provide coverage, and most health care plans in the US do not cover vision and dental for adults. Vision and dental are both critical aspects of our overall health and expensive to cover out-of-pocket. For many in the workforce, vision and dental coverage are available through their employer's group plans. It will cover routine medical and dental maintenance and standard procedures, glasses, contacts, and more.

You can also get supplemental dental and vision coverage for minor-aged children who are your dependents, so you can offset the cost of keeping those little eyes and teeth in great shape. Supplemental dental and vision insurance for children can save you a tremendous amount of money as young people often face changing vision, orthodontic needs and more. Over the years, these costs can add up and cut into your retirement savings or education funds for your children. A supplemental dental and vision policy for your kids will protect their future as well as yours.

Long-term Care Insurance

Long-term care insurance is a form of supplemental health care insurance that will cover the costs of day-to-day care in the event you need supervision, aid and assistance with daily tasks. Long-term care insurance will cover the daily cost of living in a nursing home, an assisted living facility, adult day care, or daily at-home care. Purchasing long-term care insurance can be costlier the older you are, but the peace of mind it can afford you is invaluable. If you are aged 65 or older, you have a 70% chance of requiring some form of long-term care, which can cost hundreds of thousands of dollars per year. This costly scenario will quickly deplete your life savings without some form of long-term health care insurance. Your long-term care insurance policy may also be bundled with annuities or life insurance so that your premiums are not lost if your benefits go unused. Long-term care insurance is a safe and practical way to protect your assets and ensure you can cover the costs of care should you ever require it. This form of supplemental insurance fills a big gap that exists in most standard health insurance policies.

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Do You Need Supplemental Insurance With Medicare?

There are different levels of coverage through Medicare. Original Medicare and medicare part B will cover a lot of healthcare expenses, including hospital stays and doctor’s visits, and will be valid regardless of which hospital, doctor or health care provider you choose. However, it doesn’t cover all of your medical expenses. This type of coverage will cover most of your hospital bill, but you will be responsible for paying the rest out of your own wallet. What’s more, Original Medicare doesn’t cover most prescriptions.

Medicare C or Medicare Advantage covers hospital, doctor and prescription costs, but it comes with deductibles, copays and other out-of-pocket expenses.

So, do you need supplemental health insurance with Medicare? Further, do you need supplemental insurance with Medicare Advantage? And do you need supplemental insurance with Medicare A and B?

Ultimately, the answer is up to you, but, often, seniors believe they are covered in every instance of medical need when they have Medicare, and they may not always be. That’s why it’s essential to look into the forms of supplemental health care coverage that could fill in the gaps left by Medicare. If you are on Medicare, ask your healthcare provider to discuss if you do need supplemental health insurance with Medicare part B. Your provider will help you to discover if you are one who should buy supplemental health insurance due to your unique medical care and needs.

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Why Do You Need Supplemental Insurance with Medicare?

Both Original Medicare and Medicare Advantage leave a lot of costs out of their coverage that you will have to pay out-of-pocket. Supplemental health care insurance, otherwise referred to as Medigap insurance when it is supplementing Medicare, is necessary to cover the difference between what Medicare covers and what you may have to pay yourself. Medigap insurance protects your investments, your savings and your retirement plan by covering expenses that have the potential to deplete your assets and diminish your ability to maintain your lifestyle.

Why do you need supplemental insurance with a Medicare Advantage plan? Medicare Advantage coverage comes with deductibles, copays and other out-of-pocket expenses that have the potential to harm your financial well-being. Supplemental coverage will ensure you can afford to cover these costs and maintain your financial stability.

So, why do you need additional insurance with Medicare? It’s always a sound decision and a great way to protect our ability to uphold our lifestyle.

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How Do You Find and Enroll in Supplemental Health Insurance?

If you’ve decided you want additional coverage on top of the health care coverage you already have, finding supplemental policies that are right for you can be relatively easy. The best way to start is to get quotes and information from trusted insurance providers. Be sure to ask all the questions you may have about the policies you are interested in and then compare and contrast the pros and cons of each.

You can find supplemental health care providers through the following avenues:

  • Ask your employer’s HR department
  • Through an association such as AHIP (America’s Health Insurance Plans)
  • A Google search for health insurance providers in your area
  • Through Medicare and Medicaid

If you need help getting started planning to purchase your supplemental health insurance, sign up for a free account with Everdays for resources and assistance.

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How Much Does Supplemental Health Insurance Cost?

Supplemental health insurance coverage costs can vary depending on many different factors. These variables include your age, your current state of health, the specific type of coverage you are looking for, the health insurance provider you have chosen, the state you live in as well as your existing health care coverage. All of these factors combined can make potential premiums vary widely. However, the average cost to seniors for supplemental health care coverage is between $100-$200 per month. A plan with a high deductible, though, could cost you as little as $50 per month, and a plan for those over the age of 80 could come with a premium greater than $200 per month. We suggest acquiring several quotes and comparing the costs vs. the coverage before you choose your supplemental plan. Make sure your premiums fit into your budget.

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Our content is created for educational purposes only. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Everdays encourages individuals to seek advice from their own investment or tax advisor or legal counsel.


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