Four Situations When Supplemental Health Insurance Makes Sense (When You’re Not Retired)
There is probably no topic less exciting and more annoying than health insurance . The whole experience is frustrating for most people: navigating the plans is confusing, everything seems very expensive, and when you make a claim, you often receive empty rebuttals that don’t explain anything and don’t give you the opportunity to appeal or get more information. That being said, most people believe that by choosing a plan through their employer, they will at least be protected from catastrophes for the foreseeable future.
But this may not be the case. When we talk about supplemental insurance, we usually mean Medicare because of the well-known gaps in this coverage. But even if you have really good insurance from an employer or organization, you may have to pay additional insurance to make sure you’re fully protected. Task? Find out if you really need it.
What is additional insurance?
Supplemental insurance is something you buy on top of your primary coverage and is designed to cover anything your overall policy lacks. This is not intended for primary coverage. There are many types of additional insurance. For example, if you traveled to another country and purchased travel health insurance, this is a form of additional insurance. You can purchase special add-on plans that will cover you for accidents, critical illnesses (including special policies for cancer diagnoses), hospital, vision and dental expenses, and disability.
You pay a premium for supplemental insurance and have a set benefit schedule just like other insurance, but supplemental plans usually pay either a flat amount or a percentage of your costs directly to you. So, for example, if you have a hospital indemnity plan and after a week in the hospital you are hit with a huge bill that your primary insurance only partially covers, your supplemental insurance will kick in and send you a lump sum check to help cover those costs. cost.
Of course, additional health insurance comes with additional costs, so the main question you need to answer is whether you really need it. Paying twice for the same coverage doesn’t make sense, nor does paying for coverage you’ll never use. But there are four scenarios where it’s obvious you need additional insurance.
If you have a high deductible
The average employer health plan deductible continues to approach $2,000 , and the out-of-pocket maximum (the maximum amount you will pay, including deductibles and copayments, during the life of your policy in addition to the premium) is capped by law at 9 $450 for individuals and $18,900 for families, although the average out-of-pocket expense in 2023 was $4,346. So, as a fun experiment, compare these numbers to your savings account. If there is a significant gap, it means you may not be able to pay for large medical expenses without resorting to loans, home equity, or credit cards.
If this describes your situation, supplemental health insurance may be a good idea, as it can cover at least some of these costs and reduce the risk of infection. At the very least, it may give you more breathing room if you have to pay for an expensive surgery or hospital stay.
If you are at high risk for health problems or injuries
Another reason you might want to pay for additional insurance is if you have a higher risk than most people for major health care expenses:
-
Family History . If you have a high prevalence of serious illnesses such as cancer, or have had genetic testing and are at high risk of developing some form of cancer, paying for additional insurance may make sense since there is a good chance you will have to pay at some point for expensive treatment.
-
Dangerous work. If you work in an industry that has a very high rate of serious injuries, such as construction or logging, you may need additional insurance to protect you from frequent medical bills.
If you use healthcare services a lot
If you typically use a lot of healthcare resources due to a health condition or family emergency and don’t expect that to change anytime soon, supplemental coverage may make sense. While you may be able to reach your deductibles and out-of-pocket maximums fairly quickly, your policy may not provide enough coverage for your needs.
This is especially true if there is a risk that you will become unable to work. Your primary insurance may cover most or even all of your expenses, but can you handle the loss of income over a period of time? If you can’t work, you may also need to pay for additional expenses such as child care , domestic help, or in-home care, and additional insurance can make the difference between financial survival and ruin.
If there are gaps in your coverage
Finally, supplemental insurance can fill gaps in traditional insurance coverage, such as dental and vision insurance, which (ironically) is considered separate from health insurance and is often, unfortunately, skimpy in terms of what it covers. Who hasn’t gone to the eye doctor and discovered that their basic vision insurance barely covers the cost of the exam and offers nothing at all for expensive glasses and contact lenses? Or discovered that their dental insurance has such a high deductible that it never actually pays for anything more than biannual cleanings?
If your vision and dental insurance aren’t much help, a supplemental plan may be helpful, especially if you expect to be using the dentist a lot in the next year (for example, if you’ve been putting off dental work because your insurance is crap and won). I’m not hiding anything).
Supplemental health insurance isn’t always necessary, but it’s worth crunching the numbers to see if it could benefit you, especially if you fall into one of these four categories.