Do You Need Supplemental Health Insurance?

Disability Benefits

As medical advances continue to extend the human lifespan, many people are discovering that traditional health insurance doesn't always provide sufficient coverage for their medical expenses. This is where supplemental health insurance comes in. Policies designed to bridge gaps in ordinary health care plans can provide greater financial security as you continue to age.

What Is Supplemental Health Insurance?

Supplemental health insurance is designed to pay for additional expenses your primary health plan doesn't cover, such as pre-existing conditions and experimental treatments. Not everyone needs a supplemental plan, but it's good to have one if you anticipate large medical bills down the road. The major differences between supplemental and standard health insurance are that supplemental plans include:

  • Specific defined benefits per procedure or medical expense
  • Predictable monthly costs
  • Stable prices over the long term
  • Coverage for copays or medical bills your health plan won't cover
  • Cash benefits for everyday bills that are paid directly to the insured
  • A much lower benefit cap than a regular plan
  • A much lower cost than a regular health plan

Who Needs More Coverage?

If you're considering a supplemental plan, you may have already encountered a situation in which your primary health insurance didn't cover a particular procedure, causing co-pays to pile up. You should consider extra coverage under the following circumstances:

  • You are at high risk for a prolonged illness.
  • You have been diagnosed with a serious medical condition that requires a lot of treatments.
  • You are the sole earner in your family.
  • You are self-employed.
  • You use Medicare as your primary health insurance.

If you are in one these high-risk categories, a supplemental plan can provide you with peace of mind. Many people don't realize how quickly co-payments can add up and potentially drive a family into serious debt. If you're in good health and don't fall into one of these groups, however, you might not need additional coverage. Consider your family health history and living situation to determine whether the benefits of extra insurance outweigh the costs.

Types of Supplemental Plans

There are three types of supplemental insurance plans. What you may need depends on your circumstances.


Also known as critical illness supplemental insurance, these policies focus on a particular disease, such as cancer. If you're predisposed to a certain disease, this type of additional coverage can pay for costs not covered by ordinary insurance. Some of the costs covered by disease-specific plans include payments for daily bills, travel to and from medical facilities, and lump-sum payments to help you pay for food and other living expenses.

Accidental Death and Dismemberment

This type of policy pays for medical costs incurred as the result of an accident and is popular with individuals who work in dangerous industries. Because disability payments are usually only a fraction of your full income, accidental death and dismemberment insurance can help bridge the gap between your regular pay and disability benefits. This form of insurance also pays a death benefit to your family if you die in an accident as defined by the plan.

Hospital Indemnity

Hospital indemnity insurance pays out a cash benefit in the event of an extended hospital stay. This benefit can help your family pay the bills during long periods when you can't work due to injury or illness. Depending on the plan, payments can be disbursed daily, weekly or monthly.

Supplemental Insurance Providers

There are a number of companies that offer supplemental plans.


Aflac is the nation's largest supplemental insurance company and offers a wide range of coverage options. The company was one of the first insurers to introduce cancer-related coverage in the late 1950s. Over the years, Aflac has expanded its products to include all three types of supplemental coverage.

  • Pros

Aflac has been in business for half a century and offers the widest selection of insurance plans. The company also offers payroll deductions, which allows customers to pay their premiums directly from their paycheck. Many people prefer the convenience of having their payments withdrawn automatically.

  • Cons

With a company as large as Aflac, many customers report a lack of personalized service. Some customers also complain that the company denied payment for events that should have been covered. There is also no option to sign up for coverage online. To sign up for a supplemental plan, you must contact an independent insurance agent authorized to sell Aflac policies.


As the population continues to age, AARP is an increasingly popular provider of supplemental insurance. The company specializes in providing supplemental Medicare coverage. Also known as Medigap insurance, these types of plans fill in the areas that Medicare doesn't cover.

  • Pros

As the country's largest organization dedicated to advancing the interests of the aging population, AARP has a reputation for championing the rights of the nation's elderly. Its Medigap insurance provides comprehensive coverage to help seniors stay on budget and live comfortably during retirement. Users can fill out an application on the provider's website.

  • Cons

One of AARP's strengths is also its weakness. Because its insurance arm, which is administered by United Health Care, specializes in Medigap coverage, it lacks suitable coverage for individuals under the age of 65 unless they're eligible for Medicare disability benefits.

State Farm

State Farm provides supplemental hospital insurance coverage, which can come in handy if you're confined to a hospital for a long period of time. The company's policy pays you a cash benefit directly for up to one year.

  • Pros

Most people recognize the State Farm brand, which is known primarily for its auto insurance. The company offers discounts if you already have coverage for your home or vehicle.

  • Cons

State Farm's supplemental offerings are limited to hospital indemnity coverage. If you need a disease-specific plan or a cash benefit in the event you're injured in an accident, you must purchase a separate policy from another provider.

Shopping Tips

Not all coverage is created equal, so it's important to shop around. Consider the following when picking a plan:

  • Ask if the provider offers multi-line discounts. Many companies charge lower premiums when you insure other items, such as your car and home.
  • Avoid paying for overlapping coverage. Your primary provider might offer some benefits similar to those found in supplemental plans.
  • Carefully read each plan's declarations page to determine if there are any exclusions or waiting periods. For example, some supplemental plans don't kick in until you have been ill for a certain length of time.

Deciding on a Plan

Supplemental health insurance can provide tremendous peace of mind for those at risk of developing lengthy or debilitating illnesses. Even if you have comprehensive traditional medical coverage, you're still vulnerable to major deductibles, costly co-pays, and unfair denials. A supplemental health plan can alleviate the worry of paying for medical needs or keeping your household afloat over the long haul.

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