Supplemental health insurance pays cash directly to the insured to help pay for out of pocket expenses that medical insurance doesn’t cover. These are expenses like copays, deductibles and coinsurance. It can also help provide cash for other expenses as well since the insured can use the cash to pay for anything they want.
There are four basic types of supplemental medical expenses.
Types of Supplemental Health Insurance
- Critical illness insurance Critical illness pays a lump sum benefit when an insured is diagnosed with a covered critical illness. The most common critical illnesses are heart attacks, cancer and strokes. Employees can enroll in a face amounts like $10,000, $20,000 or more. Upon diagnosis of a critical illness, the insured files a claim. Once approved, the lumps sum, or a percentage of the lump sum depending on the condition, is paid.
- Accident insurance Accident insurance pays benefits when an employee is injured. Benefits are paid for injures like emergency room and hospital stays due to injury, broken bones, burns and dislocations to name a few. Benefits that are paid vary by how severe the injury is. The more severe the injury, the higher the benefit. Benefits may include accidental death and dismemberment. The thing to remember about accident insurance is that it does not pay any benefits for medical conditions. It will only pay benefits when a covered injury is sustained.
- Hospital indemnity insurance Hospital indemnity insurance pays a lump sum benefit to the insured when is admitted to the hospital. It may also pay a daily amount if you are confined to the hospital. Higher benefits are often paid if you get admitted to the intensive care unit of the hospital versus a standard room.
- Specified disease insurance Specified disease insurance pays treatment benefits for a specific disease. While it will usually have a lump sum benefit upon the diagnosis, it will also include payments if you receive specific treatments. The most common specified disease policy is a cancer policy. A lump sum would be paid upon diagnosis with additional payments made if you receive chemotherapy treatment as an example.
Why are Supplemental Health Benefits Important?
Over the years, deductibles and out-of-pocket maximums on health insurance have increased substantially.
It is not uncommon for an employees deductible to be $5,000 and an out-of-pocket maximum to be $10,000 for in-network benefits. Out-of-network benefits have even higher deductibles and out-of-pocket maximums.
Once employees receive medical treatment, the medical bills arrive soon after.
These plans help employees have cash to pay for these bills.
Conclusion
There was a day that supplemental medical benefits were offered as a after thought. Employers would often tell employees they didn’t need to talk to the insurance representative who offered these plans.
Now, things have changed quite a bit. Most employers will offer at least the critical illness and accident plans.
Employees also see the value of these plans more so in the past.
It’s always a good practice to review these plans and the benefits they offer during enrollment
