If there’s a lesson to come from 2020, it’s this: expect the unexpected. As health insurance brokers serving clients across the Southwestern United States (Arizona, Nevada, New Mexico, Texas, and California, as well as others across the nation), RMS Insurance Services is here to help you out when the unexpected occurs. We understand that no one ever wants to consider the “worst-case scenario,” especially when you’re in reasonably good health and resting easily at night knowing you’re covered with health insurance. Surely – a standard medical insurance plan is enough, right? Do I really need supplemental insurance? Is it worth the investment?

Let’s dive into those questions, but first, let’s take a look at some quick facts and figures on medical expenses and debt in America, which continues to be a problem, even with the ACA in place.

Medical Debt – Does it Affect You?

Think bankruptcy due to medical costs can’t happen to you? Consider the following stats we rounded up on medical bankruptcy, which paint a harrowing picture of our healthcare system.

  • According to a February 2021 Lending Tree survey of 1,550 Americans, 60% of Americans have been in debt due to medical bills, and many stated that their medical debt keeps them from obtaining financial goals such as saving for a house or retirement.
  • That same survey found that the top causes of medical debt are unexpected or unavoidable expenses, such as “emergency room visits (39%), doctor or specialist visits (28%), surgery (26%), childbirth (22%), or dental care (20%).”
  • The Kaiser Family Foundation reported in February 2020 that 65% of Americans worry about surprise medical bills.  “About two-thirds of Americans say they are either ‘very worried’ (35%) or ‘somewhat worried’ (30%) about being able to afford unexpected medical bills.”
  • Furthermore, one-third of insured adults, aged 18-64, received an unexpected medical bill in the two years prior to the survey, according to KFF.
  • 62% of those with medical debt were insured when starting treatment, KFF also reports. Having health insurance is not a guarantee that you won’t end up with a massive unexpected bill after undergoing treatment.
  • Medical bankruptcies represent 66.5% of all personal bankruptcies, according to the American Journal of Public Health. The amount of bankruptcies due to medical debt has greatly improved since the Affordable Care Act took effect; however, that’s still an alarming number. A simple injury or illness can cost thousands of dollars, and even those with health insurance can be billed absurd amounts of money.

What Is Supplemental Health Insurance? 

Supplemental health insurance is extra insurance you can purchase in addition to your health insurance, and is meant to help cover the cost of services and out-of-pocket expenses your regular insurance doesn’t cover.

There are a variety of supplemental health insurance plans and options available. Some will cover the cost-sharing expenses that go along with your health insurance plans, such as the cost of deductibles, copayments, and coinsurance. Or, supplemental health insurance can cover medical services that aren’t covered by your basic plan, such as dental and vision costs.

Other supplemental health plans can provide a cash benefit paid out in a lump sum or over time which can be used for:

  • Lost wages due to illness or injury.
  • Transportation, travel, or lodging, related to your health condition.
  • Unexpected expenses such as food, medication, or other medical supplies because of an illness or injury.
  • Experimental treatments
  • Childcare and household assistance
  • Normal living expenses – car payments, utility bills, groceries.

Specific Types of Supplemental Insurance

As mentioned, there are different types of supplemental insurance plans you can add to your standard health insurance policy.

  • Critical Illness Insurance. Also known as disease-specific insurance, this type of plan is meant to ease the burden of a critical illness, such as cancer. Generally, critical illness plans have a very specific list of diseases that will trigger a payout, so it’s important to know exactly how your policy works.
  • Accidental Death and Dismemberment Insurance. The first type of accident policy, AD&D (often combined and sold with Supplemental Accident insurance), will pay out a cash benefit to your beneficiaries if you die in an accident. Furthermore, it will pay out a smaller amount for injury, such as the loss of a limb, paralysis, or blindness. AD&D insurance won’t pay out for deaths related to disease, suicide, or natural causes.
  • Supplemental Accident Policy, also known as an Accident Indemnity Policy or Accident Medical Insurance, can pay for medical costs due to an accident or injury and is often combined with an AD&D policy. These policies are popular with healthy men and women who have insurance plans with high deductibles because they defray upfront premium costs while providing a “backup plan.” Some of these accidental policies can also pay for lodging expenses for family members and extended home care services.
  • Hospital Indemnity Insurance. Also known as Hospital Confinement Insurance, pays out a cash benefit if you’re confined to the hospital because of a serious injury or illness.
  • Medigap. One of the most common types of supplemental insurance, Medigap is purchased by people enrolled in Original Medicare from a private insurance company, and cannot be paired with Medicare Advantage Plans. A Medigap policy can help cover many health-related services and supplies, such as long-term care, dental, vision, deductibles, coinsurance for hospital stays past 60 days and other costs for outpatient and physician care.

Unknown Expenses Covered by Supplemental Insurance 

We have over 40 years of combined experience in the health insurance industry, and our experience tells us that many people have trouble articulating their “known” expenses when it comes to health insurance (such as their deductible costs). Beyond “the expected” or “known” medical expenses, what about the unknown? Many just assume that their insurance covers everything, but the truth is, there’s likely plenty that your health insurance plan doesn’t cover. For example, as stated previously, a third of adults aged 18-64 have received a surprise “balance bill” in the past two years. Even if those bills are relatively minor in cost, they can have a detrimental effect on people already struggling to make ends meet due to financial hardship or being on a fixed income.

Need or want to see an out-of-network doctor? Want to try an experimental medication for an illness you’re suffering through? Laid up in the hospital with no source of income to provide for basic living expenses? All of those are considered unknown costs that most people don’t plan for – all of which could be covered by a supplemental insurance policy.

Do I Need Supplemental Insurance?

So, you may be asking yourself: do I need supplemental insurance? Our answer here at RMS Insurance Services: it depends. Whether you need supplemental insurance depends entirely on your health history, financial status, and how well you’re protected with your regular health insurance plan. If you’re under the age of 65 or you don’t have Medicare, here are some questions to ask:

  • If you or a family member got into an accident or became critically ill, will your health insurance plan cover the cost of treatment?
  • Are you able to pay out-of-pocket expenses in the event of an accident or illness, including the costs of living while being out of work for an extended period of time?
  • What is the likelihood of you or a family member developing a major illness or being injured?
  • Does the cost of supplemental insurance over time make sense? Consider the following:
    • How much will you pay in premiums over the course of a year or decade?
    • How likely are you to use the plan?
    • Is your employer subsidizing the costs of supplemental coverage?

There’s clearly no one-size-fits-all answer as to whether supplemental insurance is the right choice for you and your family. In our experience, it’s always best to have coverage for those “unknown” expenses that can pop up. At RMS Insurance Services, we are always available to go over your current policy and can price out a custom supplemental plan in addition to your health insurance policy. Furthermore, we’ll make sure you know exactly what your plan entails (including all of the benefits and limitations) so that you can rest assured that you’re covered from the unexpected.

RMS Insurance Services – Custom Supplemental Insurance Plans If you have questions about your health insurance policy and supplemental insurance, we’re your insurance marketplace experts with over 40+ years of combined experience. We gladly offer free consultations and no-obligation quotes for your insurance needs, and we serve clients across five states – Arizona, Nevada, New Mexico, Texas, and California. Book an appointment with our RMS Insurance Services agent to get a quote.