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Health Insurance

Secondary Health Insurance: A Look at How It Works

Secondary health insurance extends coverage that your primary medical health insurance may not, such as vision, dental, and hearing services.

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Secondary health insurance, also known as supplemental insurance, is an additional health insurance plan that you purchase separately from your primary health insurance.

Secondary health insurance extends your coverage and may cover services that your medical health insurance may not, such as vision, dental, and hearing services. Secondary health insurance could be used, for example, in an employment setting. If you have primary coverage through your employer as part of a benefits package, you could choose to purchase a secondary health plan to supplement what your employer doesn’t cover.

How Does Secondary Health Insurance Work? 

Your primary health insurance is the insurance that pays first after you submit a healthcare claim. After your primary health insurance pays up to its coverage limit, the remaining bill may go to your secondary health insurance. Depending on the secondary health plan, the plan may cover all of the bill or part of it. If the plan only covers part of the remaining bill, you may have to pay the rest.

While your primary health insurance may be ACA-compliant, secondary health insurance does not have to abide by ACA rules. Being ACA-compliant means that healthcare policies must conform to the regulations set by the Affordable Care Act, also known as Obamacare. This allows healthcare to be affordable for everyone, whereas, secondary health insurance may be optional to purchase. Plans that aren’t regulated by the ACA may consist of short-term medical plans, hospital indemnity plans, critical illness policies, and other secondary health plans.

When you go to a healthcare provider, you should give them your primary health insurance information. Your primary health insurance could include a plan from your employer, spouse, or parent. If you have copays, it’s important to keep in mind that your copays are from your primary health insurance. You or your secondary health insurance could pay a portion, or the entire copay amount.

Oftentimes, healthcare providers may not ask you for your secondary insurance unless you’re filling out an application for a new provider. An application allows healthcare providers to know who they should bill first.

You may choose to have multiple secondary health plans such as a critical illness plan, hospital indemnity policy, and a prescription drug plan all at once. There’s no limit to how many secondary plans you may have, but bear in mind that some plans may not be able to overlap each other. For example, you may only have one prescription drug plan. If you want a new drug plan, you may have to cancel your current plan.

You may have to contact your secondary health insurance provider directly in order to file a claim and get reimbursed for plans such as vision, dental, and a hospital indemnity plan. After your primary health insurance pays you up to their coverage limit, you may then contact your secondary health insurance provider. 

Secondary Insurance Plan Options and Coverages 

There are different secondary insurance plans that best suit your needs. Some plans help you get coverage for additional healthcare services, high deductibles, and the cost of hospital stays. Other plans may help individuals with healthcare costs in case of a catastrophe or accidental bodily injury. 

Additional Health Care Service Coverages

Dental and Vision Insurance

Depending on the plan, vision insurance provides coverage for prescription eyeglasses, eye contacts, and coverage for routine exams.

Dental insurance may provide coverage for routine teeth cleaning and X-rays. Similar to vision insurance, it may cover a portion of any oral surgeries depending on the plan. Note that vision and dental insurance are two separate coverages.

Critical Illness Insurance

Critical illness may consist of an individual that experiences a heart attack, stroke, cancer, paralysis, or renal failure. In the case of a critical illness event, the plan may pay out a lump-sum payment to the individual. The lump sum is decided upon applying for a critical illness plan and may be used for medical expenses that aren’t covered by your medical insurance. 

Prescription Drug Insurance 

Prescription drug insurance could be a stand-alone plan that, depending on the plan, helps reduce the cost of prescription drugs or pays for all of it.

It’s important to keep in mind that medical insurance may not cover medications unless there’s prior authorization. This means that a healthcare professional must show the pharmacy that you meet the criteria for a drug and explain why you need it. Compared to prescription drug insurance, you may get medication without prior authorization.

Cost Management Coverages

Gap Health Insurance 

Gap health insurance works alongside your primary health insurance and helps reduce any out-of-pocket costs that you may run into. You could use gap health insurance to cover your copays or to pay your deductibles for your medical, vision, or dental insurance. 

Accidental Death & Dismemberment and Supplemental Accident Insurance

Accidental death and dismemberment (AD&D) and supplemental accident insurance are two different policies but may be sold together. An AD&D policy pays the listed beneficiary a lump-sum payment in the case that the policyholder dies due to an accident.

In the case that the policyholder was injured due to an accident, supplemental accident insurance may help pay for medical costs and extended home care services. Supplemental accident insurance may cover other medical costs that aren’t covered by your primary health insurance, such as high deductibles and copays. 

Hospital Indemnity Insurance

Hospital indemnity insurance provides a cash benefit if you’re admitted to the hospital. The cash benefit could be paid out in a lump-sum payment or in daily or weekly payments. Once paid out, payments may go towards medical expenses that your health insurance may not cover, such as high deductibles and copays. Payments may also be used to pay for personal expenses such as rent and utilities. 

The Costs of Having Two Health Insurance Plans

When you have two health insurance plans, you may have to pay two premiums and two deductibles before your coverage kicks in. However, if you receive benefits such as secondary dental and vision insurance through your employer, you may not have to pay for it.

Depending on what type of secondary health plan you have, you may have it help pay for high deductibles or coinsurance. For example, if you were diagnosed with renal failure, you may receive a lump-sum payment from a critical illness plan that you can put towards your medical and personal expenses. 

What to Consider If You’re Thinking of Secondary Coverage 

There is an additional cost to secondary health insurance as it is separate from your primary health insurance. However, you may not have to purchase secondary coverage if you’re already listed as a dependent on your spouse’s or parent’s health plan. You may have two health plans if you are: 

  • Under 26 years old and have coverage through your parents and your employer
  • Have coverage through your spouse’s health plan and your own employer 
  • Your spouse and you have coverage through both of your own employers 

Consider the following questions to determine if secondary health coverage would be beneficial to you: 

  • Will your current health plan fully cover you if you get into an accident? If not, how much of your health plan will cover you? 
  • Do you have a high deductible medical plan? If so, would you be able to pay the out-of-pocket costs from your plan? 
  • Over the next 3 years, do you anticipate any recurring or new healthcare needs? 
  • If you were in the hospital and out of work, would you have enough funds to still support your family and yourself (for rent, utilities, childcare, etc)? 

If you answered yes to any of the questions, there is a range of secondary health plans that you could choose from. The goal of secondary health insurance is to help alleviate financial stress and reduce your out-of-pocket costs depending on your personal needs and circumstances.