Supplemental insurance – just like the term implies – is any type of plan that provides coverage above and beyond a standard health insurance policy. Supplemental coverage can be considered as emergency insurance or gap insurance. The purpose of supplemental plans is to provide additional coverage that will reduce your losses should a covered event occur and to assist with paying copays, coinsurance, and deductibles. Beyond these traditional out-of-pocket costs, supplemental insurance may also help cover lost wages, home care, childcare, travel, and lodging.
Should I have a supplemental insurance plan?
That depends on a few key factors such as your risk tolerance, risk factors, and how much insurance you want to or are able to purchase.
- Risk tolerance is your ability to pay expenses above and beyond what your insurance covers when an event occurs. Do you have enough savings to cover additional expenses? If you were hospitalized and out of work with a critical illness for a few weeks or months, would you have enough money to pay your bills? What kind of chances are you willing (mentally) and able (financially) to tolerate?
- Your risk factors include the likelihood that you will use or exhaust your existing coverage. Are you healthy or do you have the potential to develop a critical illness or a heart attack? A stroke? Cancer? Are your leisure activities ones likely to result in injury? Hiking? Climbing? Biking? Remodeling your home? Gardening?
- Finally, what can you afford? The amount and type of supplemental coverage you buy are personal decisions based on the two items above, as well as how much coverage you can afford to buy. Supplemental plans are discretionary, sometimes offered by an employer, as additional benefits, or available for purchase directly from a private insurer such as Emerge.
Are there specific types of supplemental insurance I should consider?
Two of the most important supplemental insurance plans to consider purchasing are critical illness insurance and accident (physical injury) insurance.
Critical illness insurance is designed to fill some of the coverage gaps in your health insurance. It will pay a lump-sum cash payment to you if you are diagnosed with or develop a covered illness such as cancer, kidney disease, heart attack, or stroke. The insurance company that pays out the money does not control what expenses you cover with the benefit pay-out. It can be used to cover medical-related expenses like copays or coinsurance, or you can use it to pay your house payment or other bills that continue, even though you may be out of work, and/or seeking treatment in another city – bills like electricity, natural gas, credit cards, loan payments, etc.
Accident or physical injury insurance pays a lump sum benefit directly to you in the event you need medical treatment for an accident or injury. Similar to critical illness insurance, this insurance payment will also help cover expenses outside of direct medical costs. The lump sum payment you receive from your plan can help cover transportation expenses, caregiver expenses, lost wages, and more. It’s up to you, and not the insurer, to determine what expenses your benefit pay-out will cover.
What else should I know about supplemental insurance plans?
In this supplement insurance infographic on our website, we walk you through some important points to consider when purchasing supplemental insurance, including what might be your out-of-pocket costs associated with some illnesses or accidents. If you have a heart attack, your out-of-pocket costs could be $22,500. A stroke may cost you $33,800, above and beyond what your health insurance covers. Statistics show that a bicycle crash could cost an additional $7,600 out-of-pocket and falling from a ladder at home could have you paying out $13,500! Do you have that much in savings? A survey from GoBankingRates, in September 2016, says that 69 percent of Americans have less than $1,000 in savings. If you have more than that, good for you – but can you afford to spend it all covering one unfortunate event? Or do you even want to take that risk?
The reason that these out-of-pocket expenses are so high is not always due to actual healthcare expenses, but the costs that occur outside of receiving the actual care. Remember that most insurance plans have some sort of copay or coinsurance that must be paid when care is received. That copay can vary from just hundreds of dollars to much higher amounts – thousands of dollars – for those individuals who have high deductible health plans. Beyond those medical expenses, there are other expenses, mentioned previously, that add up. If you are unable to work, you may have some coverage for short-term or long-term disability, but those benefits are typically at a reduced rate from your normal wages. Plus, you lose the opportunity for extra income such as overtime if you are used to receiving those wages.
If you are ill or laid up, with a serious injury such as a broken leg, you won’t be able to clean your home and take care of your yard. You may need help caring for your children. You may need to pay for transportation to and from appointments, or you may need to pay for lodging for you and/or your family members if your accident or illness occurs away from home. All of these things become out-of-pocket expenses.
This year, 59 million Americans will struggle to pay for their healthcare. Healthcare expenses are the number one cause of bankruptcy in the U.S., and 2 million people will experience bankruptcy as a result of medical bills. At Emerge, we want to make sure you are not one of these statistics. Our goal is to make supplemental insurance accessible, easy to understand, and affordable. Contact us to learn more about supplemental insurance plans and the protection and security they can offer.