The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.
With the rollout of Obamacare well underway, and the major changes in healthcare it’s bringing, is supplemental health insurance worth having? On the surface, the answer would seem to be no. After all, Obamacare seems to be moving us toward a single payer health care system, much as most other countries in the world have. That would seem to leave the little room for any other forms of coverage. But for the time being, it’s worth investigating.
What is supplemental health insurance?
You’ve undoubtedly seen those semi-annoying AFLAC duck commercials – and that’s about what we’re talking about in the way of supplement health insurance. There are other companies that offer such coverage, but AFLAC is the biggest. This isn’t meant to be a recommendation, but rather a demonstration based on the largest provider in the country.
AFLAC provides supplemental coverage that is tied to specific injuries and illnesses. Some examples of the coverage they offer includes:
- Cancer or specified disease
- Hospital confinement indemnity
- Hospital confinement sickness indemnity
- Hospital intensive care
- Lump sum cancer
- Specified health event
- Short-term disability
- Dental and vision
AFLAC offers a lump sum payment in the event that any of these situations take place. It is meant to be an insurance payment over and above basic health insurance. Unlike traditional health insurance, AFLAC pays benefits direct to you, so that you can disperse it in any way you see fit. It’s primarily meant to be extra cash in the event of a medical emergency.
The cost of the coverage is relatively low. For example, you can buy a plan for less than $100 per month, that will pay you benefits equal to thousands of dollars for the covered illness or injury. Most typically, policies are offered through employers.
There is one very important caveat when it comes to supplement health insurance – including AFLAC – it is not traditional health insurance, and not meant to replace it. It will not cover basic expenses, such as hospitalization, major medical or prescriptions. In addition, hospitals and other healthcare providers will not accept it as health insurance for the purposes of admission or rendering services.
What are some situations where you might want to consider having supplemental health insurance?
If you have high deductibles
Health insurance plans have been getting progressively more expensive over the years, and Obamacare is no exception. As a result, many people have been taking the Bronze plan since it’s the least expensive of the Obamacare options. It has the highest deductible, and can expose you to out-of-pocket costs up to $6,350.
If you have taken the Bronze plan – or still have a high deductible existing plan – you may want to consider supplemental health insurance as a way of covering the deductible. Since major illnesses and accidents are likely to trigger full payment of your out-of-pocket, supplemental coverage can provide thousands of dollars to minimize the damage.
If you’re in a line of work where accidents are likely
Some occupations are simply more dangerous than others, and that’s where supplemental health insurance can be a major advantage. If you’re in occupations, such as construction, elevator repair, and many of the trades, that carry higher risk of accident or injury, supplemental health insurance may be an excellent move.
If you typically have no liquid savings
Not everyone is proficient at saving money for a rainy day, despite the sage advice provided by personal finance blogs. If this describes you, having a health insurance supplement could be well worth having, even if you don’t have a maximum deductible base health insurance plan. The lump sum benefit you would receive from supplemental health insurance would avoid the necessity of having to set up a payment plan in the event that your out of pocket costs run into several thousand dollars.
If there’s a family history of certain diseases
If there is a definite history of certain types of diseases in your family supplemental health insurance could become quite cost effective. This is especially true if the pattern is more pronounced. It can sometimes be not a question of if, but when a certain disease will happen, and having a supplemental health insurance plan specifically for that disease would come in handy.
It’s not so much a matter of certain common diseases, such as cancer and heart disease, appearing occasionally in your lineage. It’s more that the incidence of the disease in your family occurs well in excess of normal levels. A supplemental health insurance plan could lead you to be better prepared in the event that you are stricken with it. Even if you never need it, just having it can give you greater peace of mind.
If you have no other coverage
Okay, soon enough we will all be required to have health insurance coverage, or face fines for not having it. But I think it’s safe to say that, fines or not, there will still be plenty of people who will no be covered. If you’re one of them, supplemental health insurance should be a strong consideration.
Supplemental health insurance certainly won’t cover all of your healthcare needs. But it will provide a lump sum supplement that will help to pay at least some of your medical expenses. And sometimes people have expenses beyond direct medical costs. For example, if you are self-employed, commissioned, or a contract worker, a major medical event could result in lost wages. The cash that you receive from supplement health insurance can help you to pay your bills.
Supplemental health insurance isn’t for everyone, and as noted above, it is not actual health insurance. But if you are in any of the above situations, you may want to consider purchasing a plan.
How about you all? Do you have or have you ever considered purchasing supplemental health insurance? Why or why not?
Share your experiences by commenting below!
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