insurance

Cover Out-of-Pocket Health Costs With Supplemental Insurance

As deductibles rise, insurers are offering policies to cover out-of-pocket costs.

Health care costs are on the rise, and not just premiums. The average deductible for an individual with employer-provided coverage jumped from $646 in 2010 to $1,077 in 2015, says the Kaiser Family Foundation. So it’s no surprise that supplemental policies covering major out-of-pocket expenses for accidents, hospital stays or a serious illness are becoming popular. Met­Life estimates that the number of supplemental plans offered industrywide has increased by more than 20% annually over the past few years. “We’ve seen exponential growth and interest from employers who are offering these products for the first time,” says Meredith Ryan-Reid, head of accident and health/worksite benefits at MetLife.

The policies—similar to Medicare supplemental policies—can cost from a few dollars to $150 per month. They can also be purchased directly from an insurer and are available in all 50 states and D.C. Benefits are paid to you when you file a claim, often a flat dollar amount per incident (for example, $3,000 if you have a skin-piercing fracture). It may seem like a small price to pay to protect against out-of-pocket expenses, including those you might not think of (say, a baby­sitter to watch your child while you get treatment). But read the fine print. A critical-illness policy might cover only one type of ailment, such as cancer. And preexisting conditions can be excluded for up to 12 months. Disciplined savers might funnel $150 a month into an emergency fund instead.

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