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health insurance research

Supplemental health insurance

what you need to know to find the best plan and lowest pricing

by Tony Novak, CPA, MBA, MT    revised March 10, 2014

The need for supplemental health insurance has grown in tandem with cutbacks in the primary benefits provided by major medical health plans. With average deductibles and out-of-pocket costs ranging from $1,500 to $5,000 per year, major medical supplemental insurance may become as commonplace as Medicare supplement insurance. Supplemental health insurance has the added advantage of serving as an income replacement protection since policy benefits may overlap and the benefits may be paid in cash to the policy owner rather than only to the medical provider.

The Patient Protection and Affordable Care Act of 2010 increased the demand for high benefit level supplemental insurance that are used when major medical insurance is not available, not affordable or is otherwise not desirable. As a result, most of todays supplemental insurance is available in a range of benefit levels and pricing points to meet the wider range of consumer demands.


Supplemental policies are available throughout most of the country but not every policy is available in every state. To be eligible for coverage, you must have an address in an eligible state. Once a policy is issued a change of residence has no effect on the policy. Most supplemental health insurance polices are available to everyone without regard to medical history. A few of these plans do screen medical history for healthier applicants so this also presents a potential barrier to entry.

Tip: If you qualify for a supplemental policy that screens applicants for medical history, then this type of plan may offer better value and stronger benefits than a guaranteed eligibility plan that accepts all applicants.

Pays in addition to other coverage

The most important feature of supplemental insurance is that it pays in addition to other coverage. One of the primary benefits of supplemental insurance is that it pays the stated benefit in addition to other coverage. This allows the total coverage to be more than the total of the medical bills so there is extra cash to cover lost wages and other bills. Some supplemental insurance policies coordinate coverage, which means that the benefits are reduced so that the total does not exceed 100% of a medical bill. If this feature is your primary objective, make sure the plan you select offers this feature. On the other hand, a policy that coordinates benefits is less expensive than a policy that pays cash regardless of any another coverage.

Tip: Look for policies that use language like "pays cash benefit in addition to other insurance" and does not include a "co-ordination of benefits" provision.

Budget-conscious coverage

Supplemental policies are available in every level of benefits and price range. It is not uncommon for supplemental insurance to range from less than $10 per week to more than $600 per month. You get exactly what you pay for in terms of the dollar amount of benefits available. The objective is simply to balance the level of benefits desired and the amount of premium cost that fits your budget.

Tip: Have a price range in mind before going online to search for options. Your budgeted price might be expressed as a fraction of the cost of your major medical insurance. For example, a supplemental insurance may be priced at 1/3 of the cost of major medical coverage. If the major medical insurance premium is $600 per month then the supplemental insurance might be $200 per month.

Best insurance choices

ACA "Obamacare" Supplements

For qualified health insurance issued for 2014 or later, also called "Obamacare", there are two types of supplemental insurance specifically designed to help consumers lower out-of-pocket risks. Deductible Supplement Insurance covers only the policy deductible. QHP Supplement Insurance covers a wider range of  issues. It is easy to compare the rates and coverage of these choices at Members Insurance Exchange.

Group Insurance Supplements

AFLAC is the nation's most popular provider of supplemental health insurance offered through an employer, those who buy coverage on an individual basis prefer other specialty insurers who offer coverage directly online. If you wish to purchase supplemental insurance for a group of employees in your company, please call or e-mail the enrollment adviser so that we may offer the best fit product and pricing.

Individual Insurance Supplements

For individuals and families Core Plus Health Insurance from United States Fire Insurance Company has been the most popular choice for the past several years. Value Access Guarantee, a group member benefit program (not an insurance plan) from Value Benefits of America may be the best offering for those healthier applicants who qualify by answering "no" to the three medical questions on the application.

Smart accident insurance and Value 24 Hour accident plan are smaller policies with an obvious more specific focus.

Other key points

Once these three basic issues are resolved, scan this short checklist of additional items you should know about supplemental insurance:

Freedom Benefits list popular supplemental health insurance plans on a state-by-state basis. Select your state on the U.S. map on the Web site's home page to get started. OnlineAdviser offers personal assistance with additional questions through a secure online support system.


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This web site is independently owned and managed by Tony Novak operating under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator". Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak is not an agent, broker, producer or navigator for any federal or state health insurance exchange but may provide uncompensated advice, reviews and referrals to these official resources. Novak is compensated as an accountant, adviser, affiliate consultant, marketer, reviewer, endorser, producer, lead generator or referrer to some of the other commercial companies listed on this site. Information is from sources believed to be reliable but cannot be guaranteed.