What is secondary Health Insurance?
A Secondary or Supplemental Health Insurance is a policy that is used to cover medical expenses that are not covered under your Primary Health Insurance. Usually, a Primary Insurance will include deductibles and out-of-pocket expenses that you will have to cover yourself. However, if you have a Secondary Insurance policy, you will not have to worry about those expenses as you can file a claim for reimbursement. Secondary Health insurance is optional but can provide you with several benefits.
A secondary insurance can be used by more than one person at a time. Let me give you an example: Let’s look at the scenario where a married couple that are both working each have a primary insurance policy from their employers. The policy covering one spouse can be used as the primary health insurance, while the policy covering the other spouse may be used as the secondary health insurance. The way this works is that the secondary insurer will only be billed after the primary insurer has been billed.
Some insurance companies specialize in offering policies that cover specific costs that the insurance companies offering primary policies do not. In some cases, the coverage amount provided by the secondary insurer is higher than that provided by the primary insurer. This is simply because these companies realize that the majority of the costs will be absorbed by the primary insurer. While your secondary insurance may not cover all of your deductibles and out-of-pocket expenses, it can help cover large expenses in a lot of cases.
Benefits of a Secondary Health Insurance
Though not compulsory, a Secondary Health Insurance offers three substantial benefits:
1. Limited out-of-pocket expenses
The secondary insurance only kicks in after your primary insurance has been billed, i.e. the expenses that have not been covered by the primary insurer get passed on to the secondary insurer. The secondary insurer may not cover all of the remaining expenses, however a large proportion should be covered and paid. That means that you will end up paying only a very limited amount of money out of your own pocket. The secondary insurance policy may also be applied against the deductibles and out-of-pocket expenses included in the primary policy, therefore reducing the amount that you need to have handy for medical expenses.
2. Coverage of additional costs
For example, if your primary insurance policy does not provide coverage for dental or optical treatment, a secondary policy will fill in the gap. You can ask for a tailor-made secondary coverage to cover expenses related to dental (tooth fillings, extractions, and more) as well as optical (eyeglasses, contact lenses, and more) including check-ups. Other expenses that a secondary policy can cover includes visits to a pathologist or a regular check-up that are usually not covered by the primary insurance.
3. Limited claim denials
You may find yourself in a situation whereby your claim is knocked back by your primary insurance provider and therefore you end up paying the full amount of your medical expenses. This is very common with large medical bills. Well, there is a way out! If you have made a claim and been denied payment by the primary insurer, you can send the bill to the secondary insurer. In many cases, the primary insurer will request some or all of the money from the secondary provider, or they will share the cost according to the co-pay clause of the policies.
Who needs a Secondary Health Insurance?
Being the holder of a primary health insurance policy may not always protect you and may not provide sufficient coverage for any emergencies that may arise. It is therefore prudent if you take up a secondary insurance health policy. However, the main concern is can you afford the monthly premium? If that is the case, then you will need to ensure that both the primary and secondary health policies supplement each other, i.e. do not overlap and provide the same benefits.
You need to take a look at exactly what kind of coverage you are getting from the primary health insurance policy and then request a secondary health insurance policy that will cover the remainder of your requirements. This will provide you with a more comprehensive medical insurance coverage. Keep in mind that any medical expenses incurred will only be paid once by an insurance company, i.e. the primary insurer may cover say 70% of your medical bills while the secondary insurer will cover the remaining 30%.
You may also buy a secondary health insurance on top of Medicare. There are many parts that are not covered by Medicare which you may need to be covered for by a secondary insurance.
How much does Secondary Health Insurance cost?
This depends on what options you want included in your secondary insurance coverage and also on the respective coverage amounts. Some secondary insurance plans may even cover care assistance for older people that need help with daily tasks. Other plans may have options for adding hearing aids or prescription medication.
|Policy Type||Description||Costs Per Month|
|standard policy||80-20 co-pay and expenses not covered by the primary insurance policy||$65|
|comprehensive policy||includes dental and optical care, assisting equipment and prescription medication||$110|
|add private nursing costs||$150|
The important thing to note is that no primary insurance policy will cover medical expenses that are not required by a doctor’s diagnosis. This means that if you have had a medical check-up/examination done and there is no treatment required, but you still opt for treatment (e.g. preventative treatment), then you will have to pay for those costs yourself. A secondary health insurance may even be tailored to cover you to receive the best available level of medical treatment possible. Of course, this comes at your own request and will cost you extra.
The provisions included in primary and secondary health insurances may be extremely complicated. Therefore, to be on the safe side and if you need to acquire insurance coverage for specific conditions, it is recommended that you seek professional advice on how to coordinate the two policies to achieve the best result possible. There are companies that will include both the primary and secondary insurances into the same contract; a licensed insurance agent can provide you with the best options on this combination.
The bar chart below shows that the health premiums is expected to increase by over 10% over 2013 to 2016. The costs increase is caused by the health reform under the Affordable Care Act.
(image source: healthpopuli)
How to buy a Secondary Health Insurance?
When shopping around for a secondary health insurance, you need to find one that works with your primary insurer’s health plan. As for all insurance policies, to get the best deal, you need to shop around and compare rates. A good starting point is if you do a Google search and type in “secondary (or supplemental) health insurance quotes”. This will return a lot of searches and you can click on the various secondary health insurance providers and fill in the appropriate details. To get an online quote, you will need to provide details such as your age, income, place of residence, any health plans offered by the employer, etc. It should take you no more than a few minutes to receive your online quote.
As aforementioned, you will need to check that the secondary insurance policy you are signing up for does not provide the same coverage as your primary insurance policy. Also, your secondary policy will have clauses related to co-payment as well as clauses on deductibles and out-of-pocket expenses.
The co-payment clause will stipulate what amount the primary insurer will pay out of the total bill and how much will be paid by the secondary insurer. An 80-20 clause means that the primary insurance provider will cover 80% of the bill while the secondary insurance provider will pay the remaining 20%. The most common percentages are 80-20 and 70-30.
Important aspects of a Secondary Health Insurance Policy
Some important aspects that you need to check in your secondary health insurance policy are:
Some secondary policies do not cover for the full cost of medication especially if you have a complicated medical condition that requires a lot of different medicines. You should check if the secondary coverage will actually cover this cost. If it does, are you getting a full coverage or a partial coverage.
While your primary policy will generally cover for surgery expenses and hospitalization costs, it may not cover you if there is a need for an outpatient surgery. In those cases, you have to pay for those costs. But, there is a solution! Most secondary insurance companies have realized that the percentage of outpatient surgeries is on the rise, therefore, they can offer you an outpatient coverage accordingly. This can range from total to substantial coverage of the expenses incurred.
Visits to the doctor
If you are generally healthy, you will not need to visit a doctor very often. However, if you have some predisposition to a specific condition/illness, be it genetic or otherwise, then you may be faced with a situation where you may need to have regular check-ups at the doctor’s. The doctor’s fees are generally not covered by the primary insurance provider. Therefore, a secondary insurance policy will have you covered for peace of mind.
Your primary health insurance provider will not cover all your medical bills, therefore you may start to think about getting a secondary or supplemental health insurance. This will provide you with a level of reassurance so that you have peace of mind about your future medical expenses or even funds to cover a medical emergency should you be faced with one.
If you have a medical condition and are short of funds, then it is advisable to buy a secondary health insurance cover to cover for most of your medical bills including the deductible amount and the out-of-pocket expenses.
As you grow older you will find that health costs will take up a lot of your retirement funds. Various surveys have been conducted which have revealed that the average person can spend up to an amount of $240,000 in medical costs to cover them and their spouse’s increasing healthcare cost after retirement over a period of 20-30 years. Therefore, both a primary and a secondary health insurance will be very beneficial to pick up a large proportion of those costs.