When you’re enrolling in health insurance, you’ll encounter plans with not only a wide range of premiums, but also a range of deductibles and out-of-pocket costs. The trade-off is obvious: choosing a plan with lower premium sometimes comes with higher deductibles and out-of-pocket costs.
But could supplemental insurance combined with an affordable plan help soften the blow by covering some of those out-of-pocket costs – especially for critical illness and accident insurance plans? Let’s explore supplemental insurance in these cases.
Remember: if you have questions on your own health insurance policy, we’re more than happy to discuss; simply schedule your appointment today.
Making Sense of Plan Deductibles
Lower premiums that come with lower-tier plans – can certainly be attractive. But depending on your finances, it could be challenging to come up with the money to pay the deductibles and other out-of-pocket costs for those plans.
What happens if you’re in an accident or get diagnosed unexpectedly? According to a recent Bankrate analysis, more than half of American adults wouldn’t pay an unexpected $1,000 expense from their savings – and that’s less than a third of the average insurance deductible.
Regardless of how healthy you are, a significant medical event can occur at any time, requiring you to meet your health plan’s deductible. If that would be a financial burden, you may want to consider supplemental coverage that would reimburse you for some or all of your out-of-pocket costs if you meet the supplement insurance policy’s requirements.
How Various Types of Supplemental Insurance Might Help
There are a variety of types of supplemental insurance, but the ones that could prove most useful for helping to pay your out-of-pocket deductible costs are accident insurance, critical illness insurance, cancer insurance, and fixed-indemnity insurance.
We want to make it clear: None of these is suitable to serve as a person’s only health coverage – even if you were to purchase all of them together. But they may work well for you in conjunction with major medical health insurance, potentially reimbursing you for expenses that you would otherwise have to pay out of your own pocket if you meet the supplemental policy’s requirements.
Cash Benefits: Critical illness or Cancer Insurance
Let’s say we’re on an annual insurance review call. And you for example have a Bronze-level plan that has a $7,500 deductible and 20% coinsurance until you reach a $9,000 maximum out-of-pocket limit. If you get diagnosed with breast cancer and have to begin chemotherapy and radiation, you can expect to quickly hit your maximum out-of-pocket, meaning you’ll have to pay $9,000 in medical bills.
But if you have a cancer insurance policy or a critical illness policy and your cancer is covered by the policy, you potentially could be eligible to receive a cash benefit that you could use to help pay your deductible. Keep in mind that the amount of the benefit would depend on the specifics of your unique policy and the treatment you need.
There’s a lot of variation in the benefits offered and the conditions that must be met to receive a payout. During your health insurance consultation, we’ll talk you through the specifics of supplemental insurance.
Accident Insurance that Reimburses You
An accident insurance policy could also be a useful addition to your insurance plan, as these products are designed to reimburse you for some or all of your out-of-pocket costs for a medical claim that stems from an accidental injury.
As is the case with critical illness and cancer insurance policies, the benefit amount will depend on the policy specifics and the care you receive. But an accident supplement can help to cushion the financial cost of having to meet your deductible for something like a broken bone, torn ACL, or a serious cut that requires stitches.
For a wider range of claims, fixed-indemnity insurance could serve as a useful addition to a health plan. Depending on the policy specifics, it may pay benefits for a wider range of claims than the aforementioned types of supplemental coverage. For an individual-market fixed-indemnity plan, you might pay, $500 per day of inpatient hospital care, $50 for each primary care visit, $200 for an outpatient surgery, etc. The specifics will vary by plan, but it’s important to understand that the total amount of benefit you receive will depend on both the policy’s fee schedule as well as the medical care you end up needing.
As is the case with any supplemental insurance that works on a reimbursement basis, you can use the cash you receive for whatever expenses you like, including paying your deductible.
“Bob McKnight is knowledgeable, friendly and professional. He helped find the right insurance supplement plan in terms of services and cost. It was a quick & easy process.” – Mike D.
Supplemental Coverage Could Make a Plan with a High Deductible More Appealing
One of the advantages of an HDHP is that it may have lower premiums than traditional health plans. But while lower premiums are certainly a benefit, the fact that you have to meet an HDHP’s deductible before the plan will pay for non-preventive care can be challenging for some of our clients. And as noted above, the average Bronze plan has a deductible of more than $7,000. Depending on your financial circumstances, that could be a hard invoice to pay.
Having supplemental insurance might make you feel more comfortable choosing a plan with a higher deductible, since your supplemental plan would reimburse you for some of your costs if you were to have a covered claim. That said, you’ll need to do the math to see if the total premiums for the health plan plus the supplemental coverage would provide a better value than enrolling in an insurance plan that has lower out-of-pocket costs but higher monthly premiums.
As always when it comes to insurance, there’s no one-size-fits-all solution. But adding supplemental insurance might be a way to find the most affordable policy that meets your needs. We are experienced individual health insurance brokers and our family has been keeping the promise of affordable coverage for 25+ years. Get in touch with us to review your supplemental health insurance options today!
