Why You Should Consider Ancillary Insurance Products

Ancillary insurance products provide coverage options that supplement or add to your primary Medicare health insurance plan, helping to fill gaps or extend benefits beyond what standard policies provide. This article will discuss why such products could be essential to your overall health insurance planning and review some of the more popular ancillary insurance products.

Insurance Terms Defined

Just a couple of terms and how we will use them here:

• Ancillary: We're using the term "ancillary" to refer to insurance products that supplement or add to your primary Medicare health insurance coverage. In the industry, these products are also referred to as supplemental insurance products. Because we don't want to confuse Medicare supplements (Medigap) plans with what we're talking about here, we're using the term "ancillary" instead of "supplemental".

• Indemnity: In insurance terms, the goal of indemnity products is to make the insured whole after a covered loss, meaning the insurance payout is designed to restore the insured to their financial position prior to the loss. Indemnity products pay cash to the insured when they experience a covered loss; they do not pay medical providers or facilities. The insured is free to do whatever they want with the cash payouts.

Why Should I Consider Ancillary Insurance?

Around half of the Medicare population is enrolled in Medicare Advantage (MA) plans (aka, Part C plans). These private carrier plans are attractive because you can enroll in them for no additional monthly premium beyond the Part B premium you pay to the Medicare program. These plans are considered "pay-as-you-go" because, as you use certain benefits, you will have co-pays for which you will be financially responsible. This all works nicely as long as you're in good health. Once you start experiencing health issues however, the co-pays can add up.

These plans have an annual maximum out-of-pocket (MOOP) cost cap. In South Florida: for HMOs typically between $1,000 to $3,000 MOOP, and for PPOs typically between $3,900 and $7,000 MOOP for in-network care or up to $10,000 MOOP once you go out of network. Do you have the money to cover mounting co-pays for extended hospital stays or skilled nursing facility stays? Can you sustain a couple of years hitting your maximum out-of-pocket cost cap if you need extended treatment for an unexpected diagnosis? If your answer is "no", you should definitely consider ancillary insurance. If you are on Original Medicare with a Medicare Supplement (Medigap) policy, the argument for ancillary insurance is not nearly as compelling, but still ancillary insurance might play a role in your overall health insurance planning.

What Types of Ancillary Insurance Products Are Available?

Some of the more common ancillary insurance products that you're probably already familiar with include dental and vision insurance. But here I want to talk about other ancillary products you may not know about, including the following:

• Co-Pay Protection (aka, Hospital Indemnity) Plans: These plans pay cash to you when you experience hospital-related expenses. They can be configured to match your MA plan co-pays. For example, a typical PPO in South Florida will have a per-day hospital admission co-pay of around $300/day for the first five to seven days. The co-pay protection plan can be configured to pay that cash to you. We can also add other co-pays to the plan including emergency room, hospital observation, ambulance and more so that you get paid cash, making you whole (indemnify you) if you experience these events.

• Cancer Indemnity Plans: These plans pay cash to you if you get a qualifying cancer diagnosis. On an MA plan, cancer treatment will almost always cause you to reach the plan MOOP. Cancer indemnity plans can be configured to pay out $10,000, $20,000 and more on an initial qualifying cancer diagnosis. This money can be used not only to pay MA plan co-pays but also for the many other expenses that a cancer diagnosis brings.

• Critical Illness Indemnity Plans: Similar to cancer indemnity plans, critical illness indemnity plans provide a cash payout if you get a qualifying diagnosis for a variety of major illnesses including: heart attack, stroke, coronary bypass, and many others. Some also include coverage for cancer, too. Again, monies paid out from a critical illness indemnity plan can be used not only to pay MA plan co-pays but also for the many other expenses that a critical illness diagnosis brings.

• Home Care Plans: Home care plans provide an alternative solution to meeting in-home custodial care needs when traditional long-term care (LTC) insurance is not an option. LTC insurance is expensive and most people applying for it later in life simply won't pass medical underwriting. Home care plans are not insurance, but instead a membership in an in-home service network that provides in-home custodial care using both a nationwide network of caregivers and also a provision to compensate family members and friends who are willing to assist you at home. These plans have no age limit restrictions or medical underwriting requirements and are surprisingly economical compared to traditional LTC.

Contact Me for an Ancillary Insurance Products Review

I'm happy to review your current Medicare health insurance situation and see where ancillary products might be a good fit for you. Feel free to contact me here.