What is Supplemental Health Insurance?

Does your health insurance coverage truly cover everything?

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Supplemental health insurance: what it is, who it’s for, and how to purchase it

If you have purchased health insurance coverage during your employer’s open enrollment or opted to receive benefits through a private insurance company before, then you know to expect some out-of-pocket expenses. Health insurance does not normally entirely cover co-pays, medication purchases, and lab work. There are other expenses that may prove to be the patient’s responsibility even after an insurance claim has been approved.

Even top-tier insurance plans can have high deductibles or fail to cover maternity expenses or elective surgery claims. Medication coverage also varies widely across employer insurance plans. Additionally, you can purchase supplemental insurance for specific medical needs that a primary plan does not cover. Two primary examples are supplemental dental and vision plans.

This is where employees may elect to purchase additional insurance that is usually referred to as supplemental health insurance. Supplemental health insurance plans help cover the areas that the patient’s primary insurance does not cover entirely or at all. It gives customers the ability to avoid high out-of-pocket expenses or be without coverage if unforeseen circumstances occur.

Supplemental health insurance plans help cover the areas that the patient’s primary insurance does not cover entirely or at all.

The benefits of supplemental health insurance

Sometimes referred to as gap insurance, supplemental insurance acts as a type of safety net.

A Harvard University study showed that approximately 62% of personal bankruptcies in the United States are due to the accumulation of medical debt.

62% of personal bankruptcies in the United States are due to the accumulation of medical debt.
The study highlights in more detail that those that filed for bankruptcy due to medical debt were actually covered by a primary insurance plan. With staggering statistics like that, supplemental health insurance is worth the extra investment. In a nutshell, some of the primary benefits of supplemental health insurance are:

  • Guaranteed coverage of special medical needs such as dental and vision work
  • Coverage for critical illnesses that require surgeries, extended hospital stays, and frequent medical treatments
  • Accidental death policies can also be supplemental insurance. If someone works within an especially dangerous field of work, they can purchase such coverage

Aside from the types of supplemental insurance coverages themselves, gap insurance can provide peace of mind if any unexpected medical needs arise.

Who is supplemental health insurance for?

Supplemental health insurance is an option for anyone that already has coverage through a primary insurance plan but feels they need additional coverage in the future. Gap insurance is a great option for all employees, but would be especially beneficial for:

  • Employees that do not have a savings account that is higher than their deductible
  • Those that are hoping to move up a tier in their insurance coverage, but have a long waiting period before open enrollment
  • People that anticipate needing vast medical coverage over a short period of time — maternity care, cancer treatments, or specialized hospital care are just a few examples
  • Employees that simply want to know that their medical needs would be met with minimal out-of-pocket expenses

As with any recurring household expense, it’s important to weigh your options. Purchasing supplemental health insurance may not make financial sense over time if you do not have a high deductible that needs to be met through your primary insurance plan. In addition, buying supplemental insurance may not be a necessary expense for smaller-sized families that are in excellent health and do not have pre-existing conditions. Only individuals can determine if gap insurance is a financially viable option and should shop for gap insurance plans keeping the fine print in mind.

How to purchase supplemental health insurance

If you decide that additional coverage is an investment that you want to make, then shopping for a plan is straightforward.

There are numerous supplemental health insurance plans available. Many major health insurance companies offer gap insurance in addition to primary plans. Employers should make supplemental health insurance options readily available to employees. When shopping for additional coverage, it’s important to know that the Affordable Care Act does not regulate supplemental insurances. Lacking that oversight means that some gap insurance policies may not accept applications from those with pre-existing health conditions.

Human Resources departments are always the best point of contact to learn more about what your employer offers in terms of supplemental health insurance options.

Key takeaways

Is supplemental health insurance right for you?

Whether it is having extra money in savings or purchasing a gap insurance plan, it’s important to have options to fall back on when it comes to medical expenses. Medical debt can be avoided to some extent and supplemental insurance can be an effective way to ensure that even medical emergencies don’t derail you financially.

Zenefits is here to help employers navigate how to offer their employees options with ease. Work with any of our benefits brokers to bring the best healthcare coverage options to your employees.

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