Health insurance can be expensive, but nothing compares to the expense of exceeding the limits of your coverage. If you want to avoid medical bills for portions of your care that your primary insurance doesn't cover, you may consider secondary insurance. Make sure you know exactly how and when it will go into effect if your primary insurance stops paying your expenses.
Benefits Excluded from Primary Policy
Some primary policies do not cover things such as dental or vision care. If you want to cover these medical needs, you can purchase a secondary plan designed specifically for the coverage you want. In such a case, your secondary coverage works independently of your primary coverage. You only present your insurance card for the secondary insurer when you receive those services. You don't exhaust the coverage of your primary provider before you can use the secondary insurance, because the service is not covered in your primary policy.
Coverage Beyond the Primary Insurance Limits
Health insurance policies limit the amount the insurance company will pay for any given health event. If coverage for cancer tops out at $500,000, for example, any expense beyond that comes out of your pocket. You can purchase a secondary policy that pays the amount beyond your primary coverage. In this case, your secondary policy does not go into effect until your primary policy reaches its coverage limit.
Collecting Insurance Payments
Secondary insurance won't pay for items that your primary coverage pays for. However, you may collect cost-of-living expenses from a secondary policy while a primary policy pays the medical bills. Read your secondary policy carefully to understand the circumstances under which it won't pay. Don't fall into the delusion that it will pay for hospital or medicine costs that your primary coverage pays for.
Travel insurance is a special kind of secondary insurance that you can purchase to protect you on a trip. It can cover accidents and medical emergencies in addition to canceled trips and loss of property. Review your primary policy before purchasing travel insurance to see if it already covers you while traveling.
Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.