How to Choose Supplemental Health Insurance That’s Right for You

Learn key insurance terms and how to use them to choose the right supplemental health insurance policy for your needs

If you’re like most people, you need a strong health insurance plan — and possibly also supplemental insurance plan — to protect you from high, out-of-pocket medical costs. But deciding the best supplemental health policies for your needs out of myriad of options can be difficult. That’s why we’ve broken down what you need to learn about policies, insurance riders, out-of-pocket costs, and more to help you make an educated decision.

How do I get started?

First, you’ll need to familiarize yourself with industry jargon. You can study this glossary of insurance terms, but you can also keep these important items in mind:

  • Benefit maximum: This is the most an insurance provider will provide for your healthcare benefits in a year or over a lifetime.
  • Deductibles: These are required amounts you pay for healthcare services or prescription drugs before insurance payments begin.
  • Premium: This is the dollar amount you pay to the insurance company on a regular basis for coverage.
  • Coinsurance: This is the dollar amount, often shown as a percentage of the total medical service, that you are responsible for paying the healthcare provider after you’ve paid the plan’s deductible.
  • Copay:  An amount you pay each time you use a medical service, such as a doctor’s office visit.

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What is included in a supplemental health insurance policy?

“When deciding how to choose supplemental health insurance, you should think about what types of needs you have,” says Erin Bueltel, product specialist for Medico Insurance Company.
Ask yourself:

  • Do I need a plan that covers prescriptions because I take more than one drug on a regular basis?
  • Do I have a chronic condition that requires regular care?
  • Do I have risk factors to develop a chronic condition?
  • Do you have enough coverage if you experienced an unexpected illness or injury?

Bueltel says a lot of supplemental insurance plans cover only certain benefits on the base coverage, then insurance companies give customers multiple options of riders, or add-ons, that customers can elect to include with their base coverage.
Here’s a checklist from Bueltel for how to choose the right supplemental health insurance policy:

  • Decide if you want a high deductible vs. low deductible
  • Check the coinsurance amount
  • Determine the out-of-pocket maximum
  • Look at covered and non-covered services and riders
  • Include the premium when accounting for the plan’s annual expenses

Bueltel suggests: Anticipate what you think you might need covered and consider what you can afford. Then think about what you can handle financially if something catastrophic happens and you’re financially responsible for the cost of your medical care.

How do I choose between high deductible vs. low deductible?

What your insurance covers varies, depending on if you select high deductible vs. low deductible plans.
“High deductible plans are better for those that are just looking for catastrophic coverage. Low deductible plans typically have higher premiums, but benefits kick in a lot sooner,” Bueltel says.
Here’s Bueltel’s breakdown of how to choose supplemental health insurance based on deductibles and your situation:

  • High deductible: You’re generally healthy, have limited medical costs, and are looking for protection if something major were to happen, like a trip to the emergency room due to an accident or being confined to a hospital for more than a couple of days. You’re okay with a bit of risk — because you may have to pay more out-of-pocket costs to hit your deductible level.
  • Low deductible: You anticipate higher medical costs and more doctor visits. You are risk averse, and/or would like to avoid a lot of up-front, out-of-pocket costs.

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What are out-of-pocket costs?

Out-of-pocket costs are what you pay as a patient for medical care. Each plan has an out-of-pocket maximum, which is the largest dollar amount you might pay in a plan year for covered medical services, including copays, coinsurance, and deductibles, but excluding monthly premiums.

What is an insurance rider, and how does it affect my supplemental health insurance plan?

Insurance riders are defined as insurance policy amendments to add or exclude coverage for a body part, body system, or health condition. They can provide additional coverage or restrict or limit coverage.
Insurance rider options can include a variety of options – from types of extended care, such as home healthcare or nursing home care, to inflation protection. Be sure to consider your current circumstances and the rider options available as you ponder how to choose the right supplemental health insurance policy.

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What type of supplemental health insurance should I choose?

If you determine your primary health insurance won’t cover all your needs, you can choose a supplemental insurance to fill the gaps. Medico offers a variety of supplemental plans:

Hospital Indemnity insurance

This plan is supplemental hospital insurance that pays you a cash benefit if you're hospitalized. In addition to its base coverage of inpatient hospitalization or observation unit monitoring, emergency room service, and inpatient mental health services, it also offers optional riders that include some outpatient benefits, like rehab and surgical centers, ambulance services, skilled nursing facility care, and a lump sum for a cancer diagnosis. To learn how Hospital Indemnity insurance can pair with your health insurance, visit the Hospital Indemnity insurance page.

Medicare Supplement insurance 

This plan helps bridge the gap between what Medicare pays and your out-of-pocket costs. Medico offers Plans A, F, High-deductible F, G, and N, and a basic benefit plan with optional riders in Wisconsin. To learn how this insurance can pair with Medicare, visit the Medicare Supplement insurance page.

Dental Insurance

Medicare doesn’t include dental coverage, but our Gold and Platinum plans can help you with dental health costs. To learn more about this product, visit the Dental insurance page.

First Diagnosis Cancer insurance

If you're between 18 and 79 years old, Medico's First Diagnosis Cancer plan can help if you’re diagnosed with internal cancer or malignant melanoma. It’s a one-time benefit that is paid directly to you. To learn more about this product, visit the First Diagnosis Cancer​ insurance page.

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Medico Insurance Company disclosures

This article may contain links to third party websites, but Medico is neither responsible nor liable for their content, accuracy, or security. Review our Terms and Conditions to learn more.

Photo credit: iStock

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