Why Does One Need Supplemental Insurance?

There are almost as many flavors of supplemental insurance available as there are insurance companies and their affiliate marketers. For example, AARP and other large organizations sells others' plans they have vetted as "best" for their members but are not insurers. That gives people the ability to shop around until you find the supplemental coverage that's right for you and your family.
Do you need it? No one requires you purchase secondary, also called supplemental, insurance, but it does help to cover expenses when you may need that help.

How it Works

• Supplemental insurance works in much the same way as your existing insurance, except that supplemental health insurance pays you directly. Think about supplemental insurance as a way you can create an additional shield between you and your existing insurance coverage.
  Payment of benefits is often "event-based." That is, the insurance pays you a set amount if you visit an emergency room, or for each night you spend in a hospital. In no case is the benefit sufficient to cover the cost. Rather it reimburses you for expenses your existing insurance does not cover. Do not purchase supplemental insurance as your only protection.

Filling Gaps

• Some policies cover "gaps" in your present coverage, such as deductibles or co-pays, or out-of-pocket expenses that your present insurance doesn't cover. Others can supplement lost income when an accident or illness prevents your working.
  You can purchase three types of supplemental insurance: disability, accident and health.

Disability

• When you can't work for an extended period due to an accident or illness, trying to make ends meet can appear otherwise impossible. Supplemental short-term disability insurance can provide extra cash until you're back on your feet.

Accident and Sickness

• The cost of care going to a hospital emergency room, such as an ambulance ride, after an accident costs serious money, particularly if your visit involves further hospitalization and treatment followed by outpatient therapy. Once again, supplemental insurance will provide you with cash payments to cover some of your out-of-pocket costs.

Health Insurance

• Pre-Medicare supplemental insurance provides you with cash you can use to help cover your deductible, co-pays and uncovered out-of-pocket expenses.
  If your existing health care does not translate into secondary, supplemental coverage when you enroll in Medicare at age 65, you can purchase supplemental coverage, called Medigap.
  Unlike other supplemental insurance, the secondary Medicare insurer pays the supplier to help cover your cost of deductible, co-pay and the 20 percent of the bill Medicare doesn't cover.