Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 19, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.


Ever heard of “supplemental health insurance?”


Are you sure?

What about AFLAC! Yep…They are a supplemental health insurer. Continue reading if the only thing you know about this type of coverage is the duck.

There’s a lot more to it than a marketing campaign.

This type of health insurance can be the difference between “being covered” for the big stuff and going broke as a result of a serious medical situation.

Supplemental health insurance is becoming more popular (and necessary) as many employers opt to provide only major medical coverage due to rising healthcare costs.

What is Supplemental Health Insurance?

Let’s start by pointing out that it is just that…“supplemental!”

This type of health insurance is in no way designed to be your only health insurance. The coverage limits on a supplemental health insurance policy are small potatoes when compared to major medical coverage.

Supplemental health insurance, also known as defined benefit coverage, is an insurance product that covers multiple types of medical and personal expenses that may or may not be covered by a “major medical” policy.

These expenses may be the cost of medication, hospitalization or costs associated with simply missing work due to serious illness.

Additionally, this coverage may help you cope with copayments, coinsurance and deductibles…or pay your everyday bills!

The policyholder is provided a specific dollar amount of expense reimbursement for particular health related services.

For example, you may receive up to $1,500 per day for hospitalization – no questions asked.

This contrasts a major medical insurance policy that has vague limits, which are subject to the interpretation of “policy language” by your doctor or claims adjuster.

Compare Quotes From Top Companies and Save

 Secured with SHA-256 Encryption

Benefits of Supplemental Health Insurance

There are a few clear benefits to purchasing this type of coverage. Let’s take a quick look at a few reasons why you may opt to purchase this type of policy.

1. It’s Cheap – We understand “cheap” is a relative term, but when compared to major medical coverage or paying expenses out of pocket, supplemental health insurance is typically a good deal.

2. No Surprises – As discussed above, there is no interpretation or misunderstanding about the benefits contained in this type of policy. If your policy says it will pay $1,000 for each night you stay in the hospital…it pays $1,000 for each night you spend in the hospital. Period!

3. You Get the Money – Yes, you read that right. You get the money, paid in cash, to spend on whatever you want. The insurer does not pay your doctor after a negotiation process. The cash comes straight to you. Use it to pay for coinsurance, copayments and deductibles if necessary.

4. No Reduced Benefits – Major medical health insurance policies typically exclude “double payment.” So if you have another policy that might pay for some of your expenses, major medical policies will simply deny your claim.

When it comes to supplemental health coverage, this exclusion doesn’t exist. You might get paid from two different policies.

For example, you may collect benefits under your personal injury protection if you are involved in an auto accident. Major medical coverage would not pay any money if this were the case. But supplemental health coverage would pay benefits ON TOP of your personal injury protection.

5. Pre-Existing Conditions – Unlike major medical coverage, supplemental health insurance does not exclude pre-existing health conditions.

Typically, there are waiting periods, also known as time deductibles, that will prevent you from simply buying the policy and collecting money.

Tip: Supplemental health insurance does not cover prescription medication coverage for pre-existing health conditions.

Major Types of Supplemental Health Coverage

1. Medigap – Mediagap is the supplemental health insurance coverage for those who qualify for Medicare insurance.

2. Hospital Indemnity – You’re stuck in the hospital…and can’t earn a living. This type of supplemental health coverage will help pay for your expenses (medical or not) while you can’t.

You may opt for a lump sum payment or receive installment benefits over time. As mentioned above; there may be a time deductible associated with this coverage.

3. Accidental Death & Dismemberment – This type of supplemental health insurance will pay a lump sum or installment benefit to either you or your named beneficiary in the event you accidentally die or lose a limb (or sight) and cannot continue to earn a living.

4. Critical Illness – There can be a lot of additional expenses for those of us who are diagnosed with a critical illness. A cancer diagnosis would be a good example.

You may have expenses such as experimental treatment, travel expenses (if the treatment is not available near your home), and any other normal living expense you cannot afford if you are no longer working. Again, you may receive one lump-sum payment or installments over time.

What to Watch For

Supplemental health insurance can be a financial blessing when it comes to receiving benefits that help pay for everyday expenses while you are hospitalized or diagnosed with a critical illness.

Just be sure you are not overdoing it by purchasing this valuable coverage without doing your research.

Many health insurance policies may already cover some of these expenses and there is no reason to pay for identical coverage.

Be sure to read and understand the terms of your existing health insurance coverage and/or speak with your agent or insurer to better evaluate your coverage needs.