What is supplemental insurance?
There are different types of insurance – all designed to help protect you and your family from financial burdens caused by anything from a flood to a spider bite.
Supplemental insurance offered by your employer is an additional way for your employer to help you protect your paycheck. It’s included in many employers’ benefit packages. But when your employer offers other insurance options in addition to your medical, dental, and vision insurance, it can get confusing. Especially since insurance that’s often referred to as supplemental or voluntary is usually related to your and your family’s health, but it is not major medical insurance.
Supplemental Insurance is Not Major Medical Insurance
Supplemental insurance policies are intended to, you guessed it, supplement your major medical insurance coverage. For example, policies like accident, critical illness, hospital indemnity, gap, and cancer may help you cover the gaps you’ll have when it comes to your deductible and out-of-pocket max. They’re designed to be used in addition to your major medical insurance – not to replace it.
High Deductible Health Plans especially have a high threshold for you to meet before your medical insurance will cover a lot of the costs. For example, if your deductible is $5,000, your medical insurance requires you to pay that dollar amount before coinsurance kicks in. If you have a major medical event, like a serious car accident, you’ll likely hit that quickly. But you still have to pay the $5,000 plus the coinsurance until you reach your out-of-pocket max. Not to mention, if you have a serious medical condition or emergency, you may have to miss long periods of work as well.
Policies Can Work Together for You
Let’s revisit the serious car accident example above. In this situation, supplemental insurance may be able to help you cover some of these expenses. Here’s how a few policies could work together for you:
- If you have accident insurance, a lump-sum benefit is available for the visit to the doctor after the accident as well as benefits for overnight hospital stays.
- If you have hospital indemnity insurance, you will also get a lump-sum payment for a covered hospital stay.
- If you have disability insurance and need to miss work for an extended period of time due to a covered disability, you’ll still get a portion of your paycheck.
Supplemental insurance often is paid directly to you, meaning you can use the money to pay for what you want to use it for. You could use it to pay toward your copayments, coinsurance, or deductible. Or you could use the benefits to pay for groceries or your mortgage payment.
To learn more about the supplemental insurance options American Fidelity offers, visit americanfidelity.com/info.
This blog is up to date as of July 2020 and has not been updated for changes in the law, administration or current events.
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