Thanks to the Affordable Care Act (ACA), or Obamacare, every American now has access to affordable health coverage. Except for the rare few that are granted exemptions, all U.S. citizens are also required to meet minimum standards for personal coverage or face penalties.
For millions that have gone without health coverage due to issues like insufficient income or pre-existing conditions that made it impossible to gain health insurance, this is a major shift. These people can now take advantage of certain medical services without paying out-of-pocket, but they also must pay their premiums in order to avoid penalties.
What if the insurance you have doesn’t cover major expenses? The ACA covers a lot of bases, ensuring access to both preventive and emergency care, but for those suffering from major medical problems like unexpected or ongoing injuries or illnesses, costs like deductibles and co-pays could pose a significant hardship.
This is where secondary health insurance comes into play. How does it work? Who can (and should) use it? What are the benefits to be gained? Here are just a few things everyone should know about secondary health insurance.
What is the Difference between Primary and Secondary Insurance?
Let’s start by examining exactly what secondary insurance is (and what it is not). Primary insurance tends to be your most comprehensive insurance policy, whether you are insured through an employer or you’re eligible for Medicare, just for example.
Many people also purchase their primary insurance policy through the healthcare marketplace (or its state-run exchanges) or via private insurance providers. This insurance should cover the lion’s share of any medical bills you accrue and it must offer minimum essential coverage to comply with ACA rules and regulations.
A secondary insurance policy is designed to cover gaps in coverage under your primary policy. Your primary health insurance may include a deductible and co-pays. When you submit a claim to pay medical bills, you will first have to pay your annual deductible for certain services.
Unfortunately, there’s no getting around this (unless you also have a qualifying supplemental insurance policy). Once the deductible is paid, however, your primary insurance may still pay only a percentage of certain bills, leaving you responsible for the rest.
This is where secondary insurance comes in. You will submit a second claim for your secondary policy to pay, reducing or eliminating your out-of-pocket expense.
Who Should Get Secondary Insurance?
Anyone facing upcoming medical expenses may want to consider obtaining a secondary health insurance policy. Whether you are disabled, dealing with chronic illness, or you know you have a major surgical procedure on the horizon, the last thing you want is to pay out-of-pocket for any medical expenses your primary insurance won’t cover.
Naturally, you will have to pay premiums on both policies, so it pays to crunch some numbers and understand all of the costs going in. However, if you know that your future expenses for co-pays are going to far exceed the costs you’ll pay for premiums on a secondary policy, it’s well worth gaining the extra coverage.
Because such policies are not required under the ACA, you can cancel them at any time without facing federal penalties for failure to maintain minimum health coverage (so long as you continue to maintain your primary coverage). You can therefor use a secondary health insurance policy as long as it continues to benefit you.