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Health Insurance–what do you think of Supplemental Plans?

09-25-2008 by Colleen King

Health Insurance is treated differently by people as opposed to homeowners or auto insurance, because unfortunately we tend to need to use it more often. Individual health insurance plans generally over 70% (or less) after you meet the deductible. So until you hit the out of pocket maximum, which is like a stop loss, your 30% adds up. Thank goodness for the out of pocket max, because that’s the part that keeps you from going broke, or paying that 30% forever.

I was asking my business partner about these in light of the current economy. His only response was on the economy, and to quote him, ‘Ruff” (see picture at the bottom of this post). Supplemental insurance can be sold in a few ways, and whether or not it makes sense depends on your personal philosophy on insurance. And yes, some people outside of this industry have insurance philosophies. These are plans you will hear about that provide extra coverage for cancer, accidents, hospitalization, critical illnesses such as strokes and heart attacks.

These may be helpful to you, but you really need to evaluate the cost versus what you get, IF you have an occurrence. The main thing that bothers me about the way I hear a lot of agents sell them, and only sell supplements, is that they describe them as ‘paying you money for what your main health insurance doesn’t cover.’ It often sounds like they make up the entire difference, and they don’t generally.

They don’t coordinate with your main insurance most of the time. They send you the specified amount after you file a claim if it meets the criteria. Then it’s up to you, if you spend it on non-medical expenses, which could be helpful, or you use it to pay medical costs.

Some employer groups will offer these to employees at the employees’ expense to enhance the benefit package. Depending on what you buy, it could be paid on a pre-tax basis, which is good for the employer and the employee. Before you go forward with it, ask the following questions:

Is there a limit to the number of times I can file a claim?

Will the rates ever go up?

What does this cost each month, and what is the potential payout?

These are just a few of the questions you need to ask. These types of plans are mostly offered in conjunction with group health insurance, but some can be offered on an individual basis. Wherever you are buying it, make sure you understand what you are getting and keep asking questions until you are satisfied.

Of course, there is always the alternative–Be well!


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