There’s a way you can hedge against health care uncertainty

A hedge is a way to help protect or defend yourself against financial loss. Supplemental insurance policies can help hedge against possible health-related charges that aren’t covered by your current insurance.

If you or a family member experiences a serious illness or accident, your insurance might not pay for all the costs incurred. Supplemental insurance can help cover a wide variety of personal health care costs, including everything from X-rays to transportation for a companion, depending on the plan. Plus, the money is paid to you directly, rather than going to doctors or hospitals first.

What types of supplemental coverage are available?

Accident insurance

Accident insurance pays out money you can use to help protect yourself and your family in case of a serious mishap, covering services like physical therapy, fractures, and doctor visits.

Hospital indemnity insurance

Hospital indemnity policies help pay for bills not covered by standard medical plans, often including a wide range of expenses, from hospital stays to diagnostic tests. Even with insurance, hospital stays can cost thousands of dollars. Without insurance, the costs are huge, with a typical three-day hospital stay costing $30,000.3

Critical illness insurance

More than 137 million Americans are struggling with medical debt, it’s important to have coverage that can help you keep your savings intact.4  Critical illness insurance targets expenses for conditions like a heart attack or stroke, which, in addition to being life threatening, can be financially draining without the right protection.

Cancer insurance

Coverage under cancer insurance policies begins with your diagnosis and continues through your recovery. As with critical illness, cancer, can increase your chance of bankruptcy by a factor of 2.5.5

High-deductible plans

Supplemental insurance coverage is well-suited for those with high-deductible plans. In 2021, the minimum annual deductible for these plans is $1,400 for individuals and $3,600 for families.6 Your deductible could be a lot more. While health savings accounts (HSAs) were implemented to help manage the out-of-pocket costs of high-deductible plans, they do not address the concern of cash flow: You may need to come up with a lump sum to cover a single event, such as an accident or something that requires a hospital stay.

With an HSA, your account may be underfunded, and you may have to deduct more from your paycheck to cover the balance. But with supplemental coverage, as long as you keep up with your monthly premium payments, you can be directly reimbursed for the full cost of care.

The health care world is in a tumultuous period — and it may remain volatile for a while. Supplemental coverage is one way to help protect yourself and your family in case you face a health crisis and unanticipated health care costs. More and more companies are offering supplemental insurance options as a voluntary benefit, which means you pay all or part of the cost of coverage but may benefit from lower rates. Check with your employer or HR rep to find out what kinds of insurance you can opt into or look for providers that will sell directly to you.

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