The ABCs of Supplemental Insurance

The ABCs of Supplemental Insurance

Supplemental insurance, also known as supplemental health benefits, can protect and strengthen your employee’s financial security. We break down common voluntary benefits and how they work.
As the cost of health care1 continually rises, Americans are increasingly looking to their employers for options to widen their safety net for unexpected medical expenses.
By offering supplemental insurance plans, also known as supplemental health benefits2, organizations can help strengthen their employees' financial security. By doing so, employers also support their employees' unique health situations, empowering them to select options that match their individual needs. By opting into an additional layer of financial protection from supplemental plans, employees can ensure they and their families are better covered in the event of a serious illness or an unexpected accident.
Nothing was more unexpected than the pandemic. Many employers responded with flexible schedules and added benefits that support their employees’ wellbeing. Now, even three years after COVID-19's onset, most U.S workers (79%) say they value the benefits their company offers according to the 2023 Future of Benefits Study. Also, 64% of U.S. workers trust their company is making the best decisions about the benefits they make available.
Voluntary benefits can also help your employees avoid debt – a reality that 60% of Americans face.3 The main contributing factors to medical debt are unpredictable events – namely ER visits – or unavoidable costs from dental care or childbirth. Supplemental health benefits provide an additional opportunity for employees to have coverage for out-of-pocket expenses or unexpected costs that may not be covered by their main health plan, such as:
  • Deductibles and co-pays
  • Treatment-related transportation, lodging and/or meals
  • Experimental treatments
  • Childcare
  • Adult daycare
  • Pet care
  • Home health aides
  • Rental/mortgage payments
  • Utility and grocery bills

Types of Supplemental Health Benefits

If you discover gaps in your current health care benefits, supplemental health plans are a great way to fill them. We’ve created this guide to help you understand the various types of supplemental health benefits available to employers.

Accidental Death & Dismemberment Insurance

What it is: Voluntary accidental death and dismemberment insurance, also known as accidental loss of life and severe injury benefits, contributes a lump sum toward covered, unforeseen accident-related expenses, specifically when they are fatal or result in loss of limb or function.
What it covers: Accidental loss of life and severe injury benefits coverage applies to accidents wherever and whenever they happen – not just at work. Depending on the policy, this coverage may also protect dependents. Benefits for covered accidents can be applied to loss of life, speech, hearing, sight, movement and limb (hand, foot, thumb and index finger).

Accident Insurance

What it is: Accident insurance, also known as accidental injury benefits, protects against unexpected financial strain due to injury or illness related to an accident.
What it covers: Depending on the plan, accident insurance can cover 80+ types of accidental injuries and their related expenses. The benefits that come with this type of supplemental health insurance cover:
  • Emergency, hospital, and treatment care, ranging from an ambulance ride to ER visits to diagnostic tests
  • Specified injuries, like dislocations, fractures, and surgeries such as pins and skin grafts
  • Catastrophic events such as accidental death, dismemberment, coma, and paralysis

Cancer Insurance

What it is: Supplemental cancer insurance offers a financial safety net to employees who have high health deductibles, a family history of cancer and/or limited savings. These plans help covered employees pay for out-of-pocket costs specifically related to a cancer diagnosis and treatment.
What it covers: Cancer Insurance plans typically include the following benefits: diagnostic testing, related travel expenses, experimental treatment options and annual preventative screening for early detection.

Critical Illness Insurance

What it is: Voluntary critical illness insurance, also known as critical illness benefits, offers financial protection to employees and their dependents if they get diagnosed with a severe illness – one that's likely to affect their ability to work and make an income. Critical illness benefits are designed to help ease financial burdens, like paying their rent or mortgage, paying for unexpected medical expenses or pursuing experimental treatment.
What it covers: Critical illness benefits go beyond what traditional health care insurance covers. This includes cancer treatment (including the ability to seek a second opinion), major organ transplants, stroke treatment and more. Often, standard Critical Illness Benefits come with additional supplemental health insurance coverage options designed to flexibly meet an employee's individual needs.

Seguro Odontológico

What it is: Supplemental dental insurance offers coverage to employees who either don't have it included in their main insurance plan or whose dental care needs exceed the limits of their existing plan.
What it covers: Most dental insurance plans cover a portion of regular exams and services, like cavity fillings. Some employees purchase supplemental dental plans for select time periods, such as while they or someone in their family needs braces or dental implants.

Hospital Indemnity Insurance

What it is: When covered employees or their dependents are confined to a hospital, their hospital indemnity insurance, also known as hospital cash benefits, can provide financial support while they are there. These benefits are designed to help them fill any gaps left by most high-deductible health plans (HDHPs).
What it covers: Hospitalized employees and/or their dependents with a covered injury or illness can use their indemnity insurance to pay their deductibles, co-pays or other living expenses that come up. These can range from family care coverage such as travel and lodging, or behavioral health and substance support benefits.

Seguro de vida

What it is: Voluntary life insurance offers employees and their family peace of mind that, if they pass away unexpectedly, their families won't unduly struggle.
There are two types of voluntary life insurance: term and whole life insurance. Term life insurance plans offer affordable coverage for employees during a specific time period. Policy holders can adjust their coverage during open enrollment and bring it with them if they change jobs. Whole life insurance is as it sounds – for the remainder of their life – which requires higher investment from employees, but is considered “guaranteed" as it builds cash value over time.
What it covers: Most life insurance plans deliver a flat dollar amount or multiples of an employee's salary to beneficiaries. Some voluntary life insurance options also include services such as estate planning, will preparation, funeral planning, travel assistance and even counseling.

Long-Term Disability Insurance

What it is: Long-term disability insurance, also known as long-term income protection benefits, helps to replace an employee's income if a covered disability keeps them out of work for an extended period of time. With the cash from a long-term income protection benefit, employees can still pay their bills, even if they cannot work due to a covered claim.
What it covers: Long-term income protection benefits cover employees who cannot work for extended periods of time. If any employee sustains a covered injury or illness, whether at work or elsewhere, that keeps them from working, they can receive disability benefits including up to 67% of their income and waived premiums.

Short-Term Disability Insurance

What it is: Short-term disability insurance, also known as short-term income protection benefits, covers employees who miss work beyond their amount of paid sick days due to a covered injury, illness or condition. When covered, their income is protected while they're unable to work, no matter where or when their illness or injury took place.
What it covers: The cash from an employee’s short-term income protection plan can also replace a portion of their income if they take Family Medical Leave for parental leave. Other covered injuries and conditions may include rehab, whiplash, surgery recovery, stress and anxiety, carpal tunnel syndrome and more.

Vision Insurance

What it is: A supplemental plan to regular health care insurance, vision insurance helps employees maintain their eye health.
What it covers: Vision insurance covers eye care services, such as eye exams as well as a prescription glasses and/or contact lenses.
1 Why Are Americans Paying More For Healthcare?, Peter G. Peterson Foundation, April 20, 2020
2 Supplemental Health products (Accident, Critical Illness and Hospital Indemnity) are independent and do not coordinate with any other health coverage.
3 60% of Americans Have Been in Debt Due to Medical Bills, LendingTree, March 15, 2021

Supplemental Health Benefits in Action

Supplemental health benefits help employees cover out-of-pocket costs that major medical coverage may not cover. By offering supplemental health benefits, organizations empower their employees to voluntarily select the right additional coverage for their needs. Employees who opt into supplemental health plans pay for this coverage separately.
1. The incident
While out riding his bike, Don swerves to avoid a pedestrian and crashes.
Unfortunately, he breaks his leg.
supplemental insurance
2. The cost of care
After an ER visit, surgery, hospitalization and various other medical expenses, his total medical bill is about $8,000. His main medical insurance covers $4,800. While helpful, that still leaves him with $3,200 in out-of-pocket expenses.
supplemental health insurance
3. Supplemental coverage kicks in
Thankfully Don has supplemental coverage to assist with costs. His accident insurance, also known as accidental injury benefits, covers $2,400 while his hospital indemnity insurance, also known as hospital cash benefits, covers $250. Now, Don's out-of-pocket insurance cost total $550.
what is supplemental insurance
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Anne Shaw
Anne Shaw
Anne Shaw is a strategic planning coach for small- and mid-sized businesses. She writes about business operations, marketing, technology and talent strategy.