Supplemental health insurance pays for medical expenses not directly related to the cost of healthcare. For example, the coverage may provide compensation for missed work. Because these benefits are meant to improve the quality of life for the insured during times of serious illness or injury, the payment is issued directly to the insured rather than being sent to the medical provider.

One of the most well-known providers of supplemental coverage is Aflac, a supplemental insurance company with an aggressive marketing campaign, but many other companies provide this coverage. Supplemental coverage is gaining popularity among people who want full protection against uncertainty and medical emergencies.

What Does Supplemental Insurance Cover?

Different forms of supplemental insurance pay for different things and apply in different situations. An individual can choose whichever policies apply best to their specific needs. For example, coverage is available for serious illness, catastrophic injuries, short-term and long-term disability, and cancer. Some coverages overlap, so it’s a good idea to review your policy to make sure you’re not paying for redundant protection.

Whether the policy is for accident, illness or disability insurance, the purpose is similar. Supplemental insurance fills in the gaps of regular health insurance and pays for the expenses that health insurance will not cover. For example, the coverage may help cover an insured’s deductible, out-of-network doctor’s visits, travel and lodging for care, therapist treatments and other out-of-pocket expenses.

Supplemental insurance policies are usually very specific to a particular ailment. For example, if you have accident insurance, the supplemental policy will only pay for treatment and expenses pertaining to accidental injuries. It will not cover serious illnesses or other types of medical conditions.

What Other Types of Supplemental Insurance Are There?

In addition to basic supplemental policies like the kinds offered by Aflac, other types of policies are available that work in similar ways. For example, Medigap policies pay for the costs outside of the limits of Medicare coverage including copayments and deductibles.

Another type of policy that’s often sold is an accidental death and dismemberment policy. This provides a hybridized coverage between a life insurance policy and supplemental health insurance, designed specifically for people who are involved in serious accidents.

There are also hospital indemnity policies that provide cash payments to individuals who must spend time in hospitals due to injury or illness. This payment should help pay for the ongoing hospitalization as well as compensate for some loss of income.

How Does Supplemental Health Insurance Pay Out?

The defining characteristic of all supplemental health insurance policies is the unique payout structure. While traditional forms of health insurance pay primarily to the health service provider, supplemental insurance pays directly to the policyholder. Once an initial claim is filed, the insurance company will review the information and issue a payment by check to the insured. Additional checks may be sent during subsequent weeks or months depending on the details of the coverage.

This means that the insured can use the funds in any way they see fit. Although the primary purpose of this coverage is to pay for medical expenses, the insured can choose to use the money in any way they see fit. Once the payment has been received, they can apply the check toward their medical payments, living expenses, bills or other costs.

For many insureds, this flexibility is the best feature of a supplemental insurance policy. Because medical conditions often cause major disruptions in a person’s lifestyle and schedule, the supplemental policy can help the patient maintain a semblance of normal life while treatment is rendered. Even if a person cannot go to work, the supplemental policy may be able to assist in paying bills and preventing a patient from accruing more debt than is necessary.

For other people, the supplemental policy may not be worth its expense. This type of insurance can sometimes be pricey and the coverage is very specific; it’s possible that an insured will carry multiple different types of coverage for several years without ever needing to use it, and it may have been wiser to set aside money for savings rather than insurance. This is not always possible, however, and in these situations, supplemental insurance can make a major difference in the life of the policyholder.

Ultimately, the choice of whether or not to buy supplemental insurance is up to the individual consumer. For people whose lifestyle would be severely impacted by lost work or who foresee a possibility of a serious illness, supplemental insurance can provide peace of mind and much-needed financial support.