If you are like many Americans, you probably have health insurance through your employer.  In fact, this is the most common way to obtain health coverage with 66 percent of Americans insured through employer-sponsored health plans.  You are probably glad you and your family have this coverage, but you may be concerned about rising costs.

If you are worried that your employer health plan is less insurance than you and your family require, then you may wish to get a supplemental health insurance policy. These supplemental policies are private plans that can pay out-of-pocket medical expenses, lost income and living expenses if a medical emergency occurs.

Why Your Employer Health Plan May Not Be Enough

Although two-thirds of working Americans got health insurance through their employer in 2014, this is down from 71 percent in 1999.  This is partially due to the economy in which more people are working part time jobs which are less likely to offer health insurance, and may also be attributable to the Affordable Care Act which requires employers with 50 or more full-time employees to provide coverage.

You may have noticed that you are paying more for your employer health plan each month. In 2016, the average annual premium for individual was $6,435 and $18,142 for a family, a 3 percent increase over 2015. This is a 20 percent increase since 2011 and a 58 percent increase since 2006.

Another troubling trend in employer-sponsored health plans is the growing prevalence of high deductibles health plans.  One study shows that employee deductibles have jumped 67 percent from 2010 to 2015.  This means that more and more often employees are required to pay a larger portion of medical expenses.

These trends are due, largely, to the fact that businesses are shifting to more inexpensive health plans that put more of the financial burden on the employees.  This takes the form of larger out-of-pocket expenses like deductibles, co-pays, and coverage maximum overages.  From 2006 to 2015, the average annual out-of-pocket expenses grew by 230 percent.

How Supplemental Health Insurance Can Help

If you are worried that your next major medical emergency could wipe out your savings you are not alone. According to the Commonwealth Fund, almost 31 million Americans were underinsured in 2014, or almost a quarter of all adults aged 19 to 64.

For many of these people, a single health issue can seriously undermine their financial situation primarily because of very high deductibles. Almost 51 percent of underinsured Americans had difficulty paying medical bills. About 47 percent of underinsured Americans lost their life savings to health costs and 44 percent say their credit rating has dropped due to medical bills. Finally, almost 7 percent of people with insufficient health insurance have had to file for bankruptcy due to medical expenses.

The solution to these issues is often a secondary health insurance policy that covers gaps your employer health plan ignores. Depending on the type of supplemental plan, it may cover out-of-pocket expenses like deductibles, copayments, and coinsurance. In addition to those benefits, some plans may offer other benefits like vision or dental insurance, as well as lost wages, travel costs, or rent.   

A supplemental health insurance policy serves as a second layer of financial protection.  If your primary employer plan refuses to cover certain expenses, with the right plan, your secondary insurance may offer to pay those costs.

In general, a supplemental health insurance policy is a reasonably priced insurance product.  Most individual secondary plans cost only a few dollars a month, while family plans usually cost $20 to $30 a month. Additional benefits may add to the cost of a supplemental health insurance policy.

You may wish to consider specific types of supplemental health insurance policy like a critical illness or cancer health insurance policy.  Those plans offer benefits to policyholders if certain medical conditions arise. If you have encountered these health issues in the past or if someone in your family has suffered from them, it may be wise to take out a critical illness policy.  After all, a major illness like cancer, stroke or heart attack may produce tens or, even, hundreds of thousands of dollars in medical bills.

Is Supplemental Insurance Right for You?

There are, of course, many considerations when determining if a supplemental health plan is appropriate for you and your family. First of all, you may be reluctant to shell out more money if you are already having difficulty paying for your primary insurance. However, you should consider what you are paying for—financial protection. Without a secondary health plan, you may be left with thousands of dollars in medical expenses that your employer health plan doesn’t cover.

Furthermore, you should keep in mind that employer health plans are becoming stingier each year.  You may not notice it, but your employer-sponsored health plan is likely to rise in premium costs, significantly raise deductibles and offer less benefits—often without notifying policyholders. Even if you believe that your employer health plan is sufficient today, it may not be enough for you and your family tomorrow.

Finally, the right supplemental health insurance policy can help protect you from expenses that most employer plans ignore.  These may include basic living expenses like rent or utilities, as well as costs associated with medical treatment including transportation and lost wages.  Without these benefits, you and your family may have to endure unnecessary hardships during a medical emergency.

If you think that a supplemental health insurance policy is the right way to protect you and your family’s finances, then you should discuss your options with your insurance agent. It is in your interest to be completely frank about any ongoing or potential health issues, so that you and your agent can determine what type of supplemental health insurance policy is right for you. There are a wide variety of supplemental health plans available, so there are a number of options that may be the best deal for you.