However, covering all health care bases with a single policy is easier said than done. Secondary health insurance or Medigap coverage allows you to plug holes in your existing plan, making your coverage as comprehensive as possible. Let's explore how these policies work and whether they're worth buying.
Secondary health insurance is a second policy supplementing your primary health insurance coverage. What your secondary insurance covers depends on your policy. Some types of secondary coverage reduce out-of-pocket costs from your primary insurer, such as deductibles. Others cover services excluded by your main policy.
Alternatively, you can purchase secondary health insurance to cover critical illnesses or injuries. These policies may pay cash to cover high medical costs, deductibles or living expenses.
Examples of secondary health insurance policies include:
Which secondary health insurance policy you need depends on the gaps in your primary policy. For example, if your primary insurance excludes vision and dental care, you may choose to purchase supplemental insurance to cover these services.
When you make a claim, your primary insurer pays first for services covered by your policy. Depending on your secondary insurance policy, your secondary insurer then helps cover your out-of-pocket costs or pays for services excluded by your primary insurance. Finally, you pay out of pocket for any expenses not covered by either insurer.
Medigap, also known as Medicare Supplement Insurance, is a type of secondary health insurance. You can only purchase Medigap coverage if you're enrolled in Original Medicare (parts A and B). It covers some of your out-of-pocket costs when you claim through Medicare.
There are 10 types of Medigap insurance, and coverage varies between plans. Each plan has a letter name (A-N). Generally, Medigap coverage includes coinsurance, copayments and deductibles and excludes:
You can purchase Medigap insurance from Medicare-approved private companies. The policies offer standardized benefits, which means plans with the same letter name must provide the same coverage, regardless of the insurer.
Having multiple health insurance policies is relatively common, but whether it's worthwhile depends on the terms of each policy. If you choose carefully, a secondary plan that adequately covers gaps in your primary plan can provide financial security when you need health care.
For instance, a secondary health insurance policy with a broad provider network could be beneficial if your primary insurer has a restricted choice of in-network providers. If you need to see a provider not included in your primary insurance company's network, your secondary health insurance policy may kick in and cover the services you receive.
On the other hand, managing two health insurance plans and paying two premiums and deductibles could prove time-consuming and costly. However, many people prefer the predictability of paying for two policies rather than worrying about paying unexpected health care expenses.
The primary advantage of Medigap coverage is that it covers many out-of-pocket costs associated with Medicare, but which expenses your policy covers depends on your plan type. For example, your Medigap plan may cover your Part A and B deductibles or pay for coinsurance if you need an extended hospital stay. Therefore, Medigap can help make your finances more predictable, and many seniors find it reassuring to have tighter control over unexpected medical costs.
Medigap policies also let you choose your medical provider. You can use any doctor who accepts Medicare, so these policies offer more freedom than secondary insurers with restricted provider networks. Furthermore, many policies cover specialist services without a referral. Purchasing Medigap coverage could be worthwhile if you value choice and want to receive care from trusted providers.
If you buy Medigap insurance, you'll pay an extra premium in addition to your Part A and B premiums. This added expense may be unaffordable for some seniors, so it's worth weighing the cost of premiums against the potential financial impact of unexpected health care bills.
Medicare Advantage Plans, also known as Medicare Part C, could be worth considering if you're unsure whether a Medigap policy is right for you. These policies are for Medicare-eligible people and replace Medicare Parts A and B.
You can purchase a Medicare Advantage Plan from a Medicare-approved insurer. Policies must offer at least the same benefits as original Medicare, but most provide additional coverage. For example, many Medicare Advantage Plans cover prescription medications (Part D), vision care and dental care.
