Business Owners Resource Network

February 24, 2009

Supplemental Health Insurance

Filed under: Employee Benefits,Financial Services — michellehodges @ 11:09 pm


In today’s world of rising health insurance premiums, I often have employers ask me how to help provide their employees with benefits but at the same time help them to contain costs.  Let’s face it, right now we all need to look at opportunities to get the best bang for our buck.  In the health insurance arena…one brillant way is to make available  supplemental insurance  policies to your employee benefit package such as Aflac and Colonial.  Here’s some more information to give you an overview of just what supplemental insurance is…

How Does a Supplemental Health Insurance Plan like Aflac and Colonial Work?

Supplemental insurance, such as what Aflac and Colonial offers, pays a cash benefit to the insured. The amount of cash and how it is paid out depends on the supplemental health insurance plan or policy. Some popular supplemental health insurance policies are specific disease insurance such as for cancer, accidental death and dismemberment insurance or accident health insurance, and hospital indemnity insurance.

Determine Your Need for Supplemental Health Insurance

Since you already have health insurance do you need any of these supplemental health insurance plans offered by Aflac and other insurance companies? Well, that depends on your risk factors and how much insurance you want to carry or can afford to carry and how much savings you have put back.

First, Obtain a Good Health Insurance Policy

Of course, the first thing you want to have is a good health insurance policy. A good health insurance policy will pay for your health insurance bills just fine. Supplemental health insurance comes in to help you pay for what your health insurance does not pay or other expenses you cannot pay if something should happen where you temporarily or permanently cannot make an income to pay your bills.

What to Consider when Choosing Supplemental Health Insurance

Only you can decide if a supplemental health insurance plan is right for you. Some things to consider when deciding if you need a supplemental health insurance plan are your health risk factors, your savings, and how much insurance you can afford. Of course no one can predict what their health will be in the future, but if you have always been in good health and take good care of yourself then you would be less likely to use a supplemental health insurance policy than someone who is often in bad health. Also, your savings should play an important role in your decision to purchase a supplemental health insurance policy. If you were in the hospital for a few weeks or more, would you have enough to cover your other expenses that your insurance would not? And, when deciding on purchasing a policy, you need to take into consideration if you can afford it or not. Supplemental health insurance policies are not often used so it is not worth it to you to purchase a policy that you probably will not use if it would be a financial burden.

Let’s now take a closer look at the three most common supplemental health insurance policies:

1. Disease Specific Insurance: This type of supplemental health insurance provides a cash benefit paid directly to you if you require treatment for a specific disease such as cancer. Usually the benefit is paid per day or per procedure. There is a usually a minimum daily benefit and a policy maximum. The cash can be spent in any way you would choose and getting your benefit would have nothing to do with how much your insurance paid for your medical costs.

2. Accident Health Insurance or Accidental Death and Dismemberment Supplemental Insurance: This type of supplemental insurance typically would reimburse you for medical costs resulting from accidents. Benefits are paid if you die (to your beneficiaries) or are disabled due to a specific accident outlined in the policy. Premiums are usually low and no medical exam is required. Accidents can include car accidents and accidents in the home or at your job. Also, if you loose limbs, fingers, toes, or your vision due to a covered accident, you may be able to collect a percentage of the death benefit.

3. Hospital Indemnity Insurance: This type of supplemental health insurance provides a daily, weekly, or monthly cash benefit if you are confined to a hospital stay. Usually there is a minimum hospital stay before benefits are paid. The cash benefit is paid in addition to any other insurance you may have. Benefits are usually reduced if you are confined to a mental hospital and often you can find plans through an employer that require no health exam.

Next week I’ll talk about how integrating supplemental insurance with a high deductible health plan makes perfect sense!

You can reach me at:

Michelle Hodges

Benefits Design Group



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