A Guide to Supplemental Health Insurance and Employee Benefits – Forbes Advisor

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Employers typically offer health insurance as a job benefit, but they also provide supplemental health insurance that goes beyond standard health insurance coverage.

These programs may offer dental, vision, life, disability or other types of coverage, often at low or no cost to employees.

What is supplemental health insurance?

Supplemental health insurance covers you beyond the usual health insurance company plan and is often part of an employer’s benefits package.

A health insurance plan offers crucial coverage for some of the most important and expensive types of medical care, but it may not cover you for dental or vision care. Health insurance also doesn’t help if you become disabled and can’t work. It also does not provide funds if you have a critical illness.

This is where supplemental insurance programs like dental insurance, vision coverage, disability insurance and critical illness insurance help.

You can also purchase these types of insurance directly from the company through an individual plan.

What does supplemental health insurance usually cover?

Employers can offer many types of additional insurance. These types can supplement health insurance coverage and may be offered by an employer or you can purchase directly from the company, but possibly at a higher cost.

Auxiliary plans include:

Dental insurance

Dental insurance is a type of supplemental health insurance that is standard in many workplaces. A typical plan covers some or all of the cost of preventive care and at least some of the cost of more expensive care, such as crowns, root canals and oral surgery.

Dental insurance policies vary, but usually cover:

  • 100% routine and preventive services: These dental services include dental x-rays, dental exams, teeth cleanings, fluoride treatments and dental sealants.
  • 80% of basic services: Basic services may include fillings and simple tooth extractions.
  • 50% of basic services: Dental plans may not cover essential services at the same level as basic and preventive services. Basic services may include root canals, dental bridges, crowns and implants, orthodontics and necessary non-cosmetic veneers.

Dental plans often do not cover cosmetic procedures, such as veneers.

Vision insurance

Some health insurance plans include vision coverage, but you can also purchase separate vision insurance coverage.

This type of insurance can cover eye exams, fitting contact lenses and glasses, as well as the cost of these visual aids themselves. These plans may sometimes offer discounts for vision correction surgeries.

Disability insurance

Employers often offer employee disability insurance to protect workers who become injured or ill and unable to work. This type of insurance can help cover some or all of your wages until you are able to work again.

Employers may offer short-term or long-term policies, or both. The difference between short term and long term is the length of coverage. Short-term disability insurance can cover you for three to six months, while long-term disability can help you for years if you’re unable to work.

Life insurance

Life insurance is another common fringe benefit offered by employers that usually doesn’t require a medical exam to qualify.

These group plans are usually employment-related, so you lose coverage when you leave work. These policies also typically have low death benefits. For these reasons, you should not rely solely on an employer’s life insurance policy.

Instead, you should think of it as additional coverage for individual life insurance policies such as term life insurance, whole life insurance, and universal life insurance.

Accident insurance

This cover pays out a lump sum if you suffer a specific type of injury as a result of an accident. Covered injuries typically include things like burns, deep cuts, and sprains.

You can use this coverage to pay for expenses not covered by health insurance, such as out-of-pocket costs such as deductibles and ambulance services. But you can also use the money for any reason, including paying rent or groceries.

You can also access accidental death and dismemberment insurance through your employer. This cover will pay out if you die in an accident or if you lose a limb or function, including hearing, speech and sight, in an accident.

An AD&D policy pays a lump sum if you die in an accident or are seriously injured. The specific injuries eligible for payment will be listed on the policy.

Critical Illness Insurance

This type of cover comes into effect if you are diagnosed with an illness specified in the policy. Illnesses that qualify for this cover are usually serious, such as:

  • Cancer, although it can be limited to a life-threatening diagnosis
  • End stage renal failure
  • Heart attack
  • Major organ transplantation
  • Multiple sclerosis
  • Parkinson’s disease
  • Hit

As with accident insurance, people typically use these critical illness insurance funds to pay for expenses not covered by their health insurance, such as deductibles or the cost of traveling to a medical facility in a distant location. But you can use the lump sum for any reason, including paying the mortgage.

Pet insurance

Benefit packages for employers can go beyond helping individuals. One example is pet insurance.

Pet insurance usually covers expenses such as fees for exams, tests and emergency care. It can also help with things like medication and surgery.

Pet insurance plans generally come in three varieties:

  • Accident and sickness plans: It covers injuries or illnesses such as broken bones, cancer and hereditary diseases
  • Incident Only Plans: It only covers problems related to an accident, such as a broken bone.
  • Routine Care Wellness Plans: Only covers routine care such as wellness visits and vaccinations

As with almost all the coverages on this list, people can instead purchase pet insurance separately from their employer. But going through the workplace plan can get you a better price.

How does supplementary health insurance work?

Each insurance company has its own rules about how supplemental health insurance works. Some types of supplementary policies, such as critical illness and accident insurance, provide a lump sum to the policyholder. This money can be used in any way.

Other types of supplemental benefits work much like a standard health insurance policy. For example, if you need dental care and you have dental insurance, your plan covers a percentage of your costs, just as a health insurance plan covers a percentage of your health care costs.

However, this type of ancillary coverage is often limited. Many dental insurance plans pick up most of the tab for routine dental exams, but if you need a root canal, you’re probably still paying for a significant portion of the procedure yourself.

Employer-contributed fringe benefits versus voluntary fringe benefits

Some companies cover some or even all of the cost of additional coverage. This is known as additional employer contribution benefit — your employer pays 50% to 100% of the premium.

But other companies require employees to pay all or most of the cost of fringe benefits, which are known as voluntary fringe benefits. In this case, your employer contributes from zero to 40%. It can still be a good deal for workers because purchasing this type of insurance through an employer allows you to purchase a group insurance plan, which is almost always less expensive than purchasing coverage as an individual.

If you are responsible for some or all of the premium associated with fringe benefits, the money will usually come out of your paycheck as a payroll deduction. The money is usually taken before taxes, which offers you even more savings.

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