You may think your job’s health insurance benefits will foot the bill if you get sick or hurt.
It will — but only to a point. You’ll still be on the hook for hundreds if not thousands in out-of-pocket costs, even with those employee benefits.
Your health plan may not cover all unexpected expenses. That could leave you with coverage gaps and financially exposed.
That’s why it’s important to consider protecting yourself from the unexpected with benefits beyond what’s offered by your employer. Here are 3 benefits that could help boost your financial protections.
What’s in this article?
- Watch out for coverage gaps
- Protect your financial security
- How supplemental health insurance benefits can help
- Next steps
What are your coverage gaps with employer-based health insurance benefits?
If you have health benefits coverage from work, chances are it comes with out-of-pocket costs. You have to pay those costs to get care. It doesn’t matter if you see the doctor, go to urgent care, or get admitted to a hospital.Your out-of-pocket costs include:
- Copayments: fixed costs you pay every time you see a provider.
- Deductibles: what you have to pay before your insurance company will begin to pay its contracted share of expenses.
- Coinsurance: the percentage you pay of the total medical bill you share with your health insurance company, many times after your deductible has already been met.
Those out-of-pocket costs also represent the coverage gap of your employer-based plan. It’s where you bear responsibility for any medical costs you incur.
So what should you pay attention to?
First, look at your deductible. That’ll be the largest number to be aware of.
If you worked at a company with less than 200 people and got employer-based benefits coverage in 2023, you’d face an average deductible of $2,434.1
If you’re worried about that number, you’d be joining the other half of the country (48% to be exact) that feels the same way.2
After that, examine your coinsurance. If your medical bills are relatively small, you probably don’t have to worry about it. But if your portion of care costs creep past four digits, then the impact on your wallet grows quite a bit.
For 2023, employer-based benefits plans had coinsurance rates at 19% for primary care and 20% for specialty.3
So, if you’ve paid your copayment, met your deductible, and still had a total bill of $1,000 remaining, you’d pay $190 to $200, depending on what kind of care you received.
Protect your financial security
So, you’ve identified your coverage gaps. Why is it important? Because these benefits coverage gaps leave you exposed financially.An unexpected illness or injury can put you in the red, even if you have health insurance. Medical bills pile up, possibly leading to debt and bankruptcy (FYI more than 60% of bankruptcies are related to medical debt).4
That’s why it’s important to know your coverage gaps and how much you may have to pay out of pocket if you do need care.
Here are two scenarios to consider using the average out-of-pocket costs for someone on an employer-based health plan in 2023:
- You break your leg while skiing.
- You’re admitted to the hospital
How supplemental health insurance can help
Adding benefits beyond your employer-based benefits package can fill your coverage gaps and protect your financial security.As an employee with job-based health insurance, you’ll also likely have disability covered through worker’s compensation.
But your job may not offer other voluntary benefits, which are increasingly popular.
A 2022 study found that more employees are choosing to pay for accident, critical illness, and hospital indemnity insurance.10
Those are three supplemental health insurance to consider for extra benefits and protection should you get sick or injured.
If you’re injured or hurt: accident insurance
Accident insurance helps you if you get hurt or injured. You’ll receive a one-time, lump-sum payment you can use to pay off your deductible or other expenses like rent or groceries.
Accident insurance is taken out to provide you a benefit if you get a specific injury like a burn or concussion.
How much you receive depends on the kind of plan you sign up for, but it can go up to tens of thousands of dollars.
Accident insurance is beneficial because it provides you with money to spend depending on your priorities. So you determine how it’s used and what it goes toward.
If you’re sick: critical illness insurance
Critical illness insurance helps you if you get sick or fall ill with a qualified condition. Like accident insurance, you’ll receive a one-time, lump-sum payment. You can use this to pay for your out-of-pocket expenses, to help with living costs, or anything else. How you spend it is up to you.
Critical illness insurance provides benefit payments for illnesses like permanent paralysis, a coma, or the loss of sight, speech or hearing. Some policies will also pay a percentage of treatment for mental health conditions.
What you would receive should you fall ill also depends on what kind of plan you enroll in. The amounts can go up to the tens of thousands of dollars.
Critical illness insurance is beneficial because it provides you with additional funds for major medical issues, which can result in large bills from providers and hospitals.
If you’re hospitalized: hospital indemnity insurance
Hospital indemnity insurance helps you pay for hospital stays and visits. You receive benefit payments based on the number of days you’re in the hospital.
For instance, say you’re hospitalized for two days. If you enrolled in a plan that paid you $250 per day, you would receive a one-time payment of $500.
You can use hospital indemnity insurance to pay for the care you receive if you’re sick or injured.
The actual amount you receive varies based on what kind of policy you enroll in, but it can go up to several thousands of dollars a year.
Just a note: benefits are only for new illnesses, not ongoing ones.
Hospital indemnity insurance is beneficial because it provides you with money to pay for any time you’re hospitalized.
Next steps
Employer-based health plans ensure almost half of the U.S. population from sickness and injury.11But they don’t cover all costs when it comes to care. To ensure you and your family are protected from unforeseen accidents, illnesses, or injuries, consider these next steps:Get to know your coverage gaps
Examine your existing health plan from work, and see what your out-of-pocket costs are. What’s your deductible? How much is your coinsurance? What is your copayment? Knowing these allows you to make informed decisions on how to plan for them.
Plan ahead
Understand your coverage gaps and get to know your possible financial exposure. What’s your comfort level with the potential costs? Have you planned for something like this and have emergency funds set aside? What are your other long-term goals to consider such as saving for retirement? How would an unexpected illness affect those?
Protect yourself
Talk to a qualified and experienced agent to see if supplemental health insurance makes sense for you. What level of added assurance would give you peace of mind against what-if situations? See how options like accidental, critical illness, and hospital indemnity insurance can help you when you need it most.
No matter what you choose and what you decide, always make sure it makes sense for your personal circumstances. Every situation differs and different people have different comfort levels with risk. Examine your budget, needs, and wants before making any decision.
