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Supplemental insurance is extra or additional insurance that you can purchase to help you pay for services and out-of-pocket expenses that your regular insurance does not cover.

Some supplemental insurance plans will pay for the out-of-pocket cost-sharing that goes along with your health insurance plan (i.e., deductibles, copayments and coinsurance) or for medical services that your health plan doesn’t cover at all, such as dental and vision costs. Other supplemental plans may provide you with a cash benefit paid out over a period of time or given to you in one 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.

Critical Illness Insurance: Critical illness insurance, also known as disease-specific insurance, is meant to ease the financial burden of a serious illness such as cancer. These policies may provide a lump-sum cash benefit to help you pay for additional costs that are related to your illness but not covered by your regular health plan or disability coverage. The money can then be used to pay for various expenses including:

• Deductibles
• Out-of-network specialists
• Travel and lodging when treatment is far from home
• Experimental treatments
• Childcare and household assistance
• Normal living expenses such as car payments, utility bills and groceries

Critical illness plans generally have a very specific list of diagnoses that will trigger a payout. If you get seriously sick with something that isn’t specifically listed on your policy, the plan won’t pay you anything—even if you incur substantial out-of-pocket costs as a result of the illness. It’s important to understand exactly how the policy works before you purchase it, so that you’re not caught unawares in a tough situation, expecting a payout from your critical illness plan and then not receiving one.

Accidental Death Policies and Supplemental Accident Plans: There are two kinds of accident policies including accidental death and dismemberment insurance (AD&D) and accident health insurance. They are often combined and sold together. The benefits vary from state to state due to local insurance regulations.

An AD&D policy will pay you a lump-sum cash benefit to the named beneficiary of someone who died in an accident. These policies may also pay smaller amounts if the person did not die but lost a limb, eyesight or suffered permanent paralysis. AD&D insurance does not pay for any deaths related to illness, suicide or natural causes.

Accident medical insurance, also known as an accident hospital indemnity policy, may pay for medical costs resulting from an accident not covered by your regular health insurance. Some of these policies may also pay for extended home care services, as well as travel and lodging expenses for family members. Some accident supplements will just reimburse you up to a pre-determined flat amount ($5,000 is common) if you have medical claims resulting from an accident.

Accident supplement policies are popular with healthy people who have high-deductible insurance plans, defraying upfront premium costs while providing a “backup plan” in the unlikely event of a calamity. The money can then be used to pay the health insurance deductible. And having an accident supplement in addition to an HSA-qualified high-deductible health plan does not interfere with the person’s eligibility to make pre-tax contributions to a health savings account (HSA).

Hospital Indemnity Insurance: Hospital indemnity insurance, also known as hospital confinement insurance, provides a cash benefit if you are confined to a hospital due to an illness or serious injury. The cash benefit which is paid out either in one lump sum or as daily/weekly payments may not start until after a minimum waiting period.

Similar to other types of supplemental insurance, the hospital indemnity coverage is meant to help you pay for services and needed items not covered by your regular health plan.

There are also fixed indemnity policies that pay up to a specified dollar amount for various outpatient services as well as inpatient care. But again, these plans are not adequate to serve as stand-alone health coverage as they can leave the insured with unlimited out-of-pocket costs in the event of a serious medical condition.

To learn more about more and for specific quotes, contact me.