Other Types of Coverage

Your employer may offer the following types of coverage as supplemental or alternative plans. Here's a breakdown of what they are, and what they can do for you ...

Hospital-surgical policies

Also known as "basic" health insurance policies, these plans provide benefits when you have a specified condition that requires hospitalization. Benefits usually include room and board and other hospital services; surgery; physicians' non-surgical services performed in the hospital; and diagnostic X-ray and lab expenses, as well as room and board in an extended care facility. Some policies contain a small deductible, but most provide "first-dollar" coverage. That means you don't have to pay a deductible for a covered medical expense. These policies are NOT a substitute for broad medical coverage, because the benefits are limited in amount and relegated to specific illnesses. This type of policy may not be available in all states.

An important caveat

The majority of hospital-surgical policies do not cover lengthy hospitalizations and costly medical care. If you find that you need these types of services, you may rack up huge medical bills unless you have other insurance.

Catastrophic coverage

This type of policy pays hospital and medical expenses above a certain deductible and provides additional protection if you have either a hospital-surgical policy or a comprehensive policy with a lower-than-adequate lifetime limit. Catastrophic plans usually have extremely high deductibles -- $10,000 and beyond -- and a maximum lifetime limit that may be high enough to cover the costs of major catastrophic illness. The bad news? You foot the first $15,000 of a disastrous illness. The good news? You may save yourself from owing the millions in medical bills you would accumulate without any insurance at all. These policies are NOT a substitute for broad medical coverage because the benefits are limited in amount and relegated to specific illnesses. This type of policy may not be available in all states.

Specified or dread-disease policies

These policies provide benefits only if you get the specific disease or group of diseases named in the policy. (For example, a policy may cover only medical care for cancer or complications from diabetes.) These policies are NOT a substitute for broad medical coverage because the benefits are limited in amount and relegated to specific illnesses. This type of policy may not be available in all states.

Hospital indemnity insurance

This type of policy pays you a specified amount of cash benefits for each day you are hospitalized, up to a designated number of days. These cash benefits are paid directly to you, and can be used for any purpose you choose. (This is useful for meeting out-of-pocket expenses not covered by the other insurance.) Some contain limitations on pre-existing medical conditions that you may have had before your insurance takes effect. Others contain an elimination period, which means that benefits will not be paid until after you have been hospitalized for a specified number of days. These policies are NOT a substitute for broad medical coverage because the benefits are limited in amount and relegated to specific illnesses. This type of policy may not be available in all states.

Medicare supplement insurance

Are you over 65? Have you signed up for Medicare within the last six months? If so, you are eligible for guaranteed issue on this type of policy, sometimes called Medigap or MedSup. This private insurance helps cover the gaps in Medicare coverage. (Medicare is the federal program of hospital and medical insurance primarily for people age 65 and over.) Ten standard Medicare supplement policies currently exist, and they are all PPOs. Any insurance company that offers medicare supplements must offer all 10 standard plans. MedSup HMOs are also available.

Long-term care policies

These plans cover the medical care, nursing care and certain in-home care (home health aides or physical therapy, for example) that you might need if you ever are unable to care for yourself due to an extended illness or disability. Most long-term care policies pay a fixed dollar amount, typically from $40 to $200 a day, for each day you receive covered care in a nursing home. The daily benefit for at-home care is usually half the benefit of nursing home care.

Keep in mind

Some state insurance departments may require a face-to-face meeting with an agent who has received special certification to sell individual long-term care plans.

Disability income insurance

If an injury or illness prevents you from working, this plan will provide you with an income. While there are other possible sources of income for the disabled, the amounts paid are often limited and many restrictions apply. Disability income insurance benefits are usually 60% of your income at the time of disability, although cost-of-living adjustments may be available on certain policies. When shopping for disability income insurance, read the fine print! Some policies only pay benefits if someone is unable to perform the duties of their occupation. Others pay only if the person cannot work at any job. Make sure you also look for policies that cover both accidents and illnesses.

Dental insurance

Paying out-of-pocket for yearly dental checkups probably won't break your bank. But what happens if you need more serious dental work? A root canal or crown can easily cost over $1000. Some health insurance plans include dental coverage as part of your benefits package. If not, you have the option of purchasing separate dental insurance. Dental indemnity or Fee-For-Service plans allow plan participants to visit any credentialed dentist or dental specialist they wish. The participant pays the dentist at the time of service and gets reimbursed according to the plan's coverage. This is the plan for those who enjoy the freedom of provider selection and don't mind a higher monthly premium and greater out-of-pocket expense. Dental Maintenance Organization (DMO) plans require members to seek all services through their assigned dentist. These affordable plans offer preventive services at little or no cost to the member. (The plans differ in premium and copay levels.) Dental PPO (Preferred Provider Organization) plans offer patients the choice of an indemnity plan and the affordability of a managed care plan.

Vision insurance

Vision coverage also might be included in a health insurance benefits package. If not, it may be purchased separately -- and is usually provided in the form of a Vision Maintenance Organization (VMO) or PPO network. Coverage generally includes yearly eye exams and a percentage of the cost of eyeglasses and contact lenses. Some plans cover all or a part of the cost of laser corrective surgery as well.