Supplemental Health Insurance -- 5 Reasons You May Need It

Congratulations! You have a job that provides health insurance benefits as part of your compensation plan. In today's economic world, having these benefits may make you feel as though you've won the lottery. But before you pop the champagne, take a minute (or an hour) to read over your policy. There is a good chance that your employer has had to make some compromises in the coverage in order to provide the policy at all, so you may find that you are responsible for more of your medical expenses than you had thought. This is where supplemental health insurance can be life-saver (or at least save your savings account).

Supplemental health insurance, or "gap" insurance, is a secondary policy that pays for out-of-pocket medical expenses not covered in your primary plan such as deductibles and co-payments. Some supplemental policies even pay you a cash benefit for lost income due to illness or injury.

If you fall into any of the following five categories, you may want to think about supplemental insurance as part of your overall health insurance strategy.

1. Are you self-employed? If so, you aren't covered at all by an employer's health plan and you need to provide all coverage yourself. For your primary insurance, you may want to consider a catastrophic policy -- which only covers major medical events and requires you to pay for office visits, prescriptions, and other minor medical care -- but which comes at a much cheaper cost than comprehensive health insurance. A supplemental policy would help cover your out-of-pocket costs, and perhaps more importantly, provide a cash benefit if you become too ill or injured to work.

2. Are you responsible for your family's health care? Remember, each person who is on your primary health plan is subject to an individual deductible and co-pay maximum, making your out-of-pocket expenses larger than an individual's health plan might be.

3. Do you lack savings? If even a few weeks off work could mean financial disaster for your family, you may need additional insurance to provide cash benefits. These cash payments can be used to make mortgage payments and buy groceries when you're off work because of illness or injury.

4. Are you concerned about the risk of cancer? There are certain supplemental policies that provide cash benefits to policy-holders for cancer treatments and the related expenses of treatment.

5. Do you have a pre-existing medical condition? Most health insurance plans will not provide benefits for medical conditions that existed before coverage became effective. However, a supplemental policy can sometimes be purchased to specifically cover a pre-existing condition. Not all insurers offer such coverage, but with careful shopping, you should be able to locate one to meet your needs.

As you can see, supplemental coverage is not always necessary for those who are fortunate to have a comprehensive primary policy. But for certain situations, a supplemental policy can be the difference between financial disaster and financial health.