Supplemental health plans may pay benefits to either the insured person or to the health care provider. The amount that’s paid and how it’s paid out will depend on the plan. These are a few types of supplemental health policies.
Critical Illness or Disease-Specific Insurance
This type of plan often provides a cash benefit paid to you if you need treatment for a certain disease such as cancer. You can spend the cash any way you choose if it doesn’t go to your care provider. Getting your benefit has nothing to do with how much your plan pays for your medical costs.
Accidental Death and Dismemberment Insurance
This type of plan will reimburse you for medical costs that result from accidents. The premiums are often low and no medical exam is required. Accidents can include both automobile collisions and accidents in your home. You may be able to collect a portion of the death benefit if you lose limbs, fingers, toes, or your vision due to an accident that’s covered.
Hospital Indemnity Insurance
This type of plan provides a daily, weekly, or monthly cash benefit if you are hospitalized. There is often a minimum hospital stay before benefits will be paid. The cash benefit is paid to you. It is in addition to any other insurance you may have.
Do I Need Supplemental Health Insurance?
Whether you need this type of health plan depends on your risk factors. You should also think about the cost of the premiums, how much insurance you want to carry, and what you want to be insured for. You may decide that a dental plan is worth buying if you think that your children will need it to cover orthodontic care in the coming years. You might think about a supplemental plan if you know that you couldn’t afford the costs of long-term care, or the loss of income if you were diagnosed with something like cancer. Long-term care or critical illness plans may be worth thinking about in these cases. Your savings should play a key role in your decision to purchase a supplemental health plan. Would you have enough money to cover your deductible, copays, and coinsurance if you were in the hospital for a few weeks or even more? Do you have money that you can access because you’ve been saving to an HSA or FSA? Buying a supplemental health plan might not be worth it if you do.
