Cover the Gaps With Supplemental Insurance

Do you have a health insurance plan?

Good to know should something happen to you, or your spouse, or a dependent, that their medical needs will be taken care of. The cost of procedures, tests, treatments, hospital and doctor costs are all taken care of. Right?

Do you know what your plan's deductibles are? Co-pays?  What is the plan's maximum out-of-pocket costs?

How much of the total cost would you be on the hook for?

The most you have to pay for covered services in a plan year is the amount paid on deductibles, copayments, and coinsurance. Your health insurance plan pays 100% of the costs of covered benefits.

The out-of-pocket limit doesn't include your monthly premiums. It also doesn't include anything you spend for services your plan doesn't cover.

For the 2020 Obamacare plan year, the out-of-pocket limit for a Marketplace plan is $8,200 for an individual plan and $16,400 for a family plan.

Private plans, including short term medical plans, can have deductibles of $10,000 or more. These high deductibles can always be lowered, with a higher premium. It's a matter of affordability and how much risk you can assume.

So the next question is how would you pay out-of-pocket costs should a major medical need arise? Savings? Borrow? GoFundMe?

The best way to cover out-of-pocket costs is with a supplemental insurance plan. 

Some supplemental insurance plans will pay for out-of-pocket medical expenses, such as deductibles, copayments, and coinsurance. Other supplemental plans may provide you with a cash benefit paid out over a period of time or given to you in one lump sum. 

The cash can be used to cover lost wages, transportation related to your health condition, or used to pay for food, medication, and other unexpected expenses you have due to an illness or injury.

Supplemental insurance plans include: accident insurance, critical illness and accidental death and dismemberment plans.

Does the extra cost of the supplemental insurance policy make sense over time? 

In other words, how much are you going to pay in premiums over the course of a year? How likely are you to use the plan? (the more specific its limitations are, the less likely you'll be to use it) Would it make more sense to stash that money in a separate account and use it to cover out-of-pocket medical costs? There's no one-size-fits-all answer, as it depends on your circumstances and the specific policy you're considering. 

Plans are available which combine accident, critical illness, and accidental death and dismemberment coverage for each member of your household. 

Accident/Critical Illness/AD&D plans can pay up to $30,000 for a covered event. $10,000 coverage on each member of a household can more than take care of the out-of-pocket. They pay benefits in addition to the main health coverage you already have.

No one wants to think of the devastating impact a major accident or illness can have on friends and family. Knowing the financial consequences of such an event does not have to result in the loss of a home or a bankruptcy provides comfort in difficult times.