How Does Secondary Health Insurance Work?

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The varieties of health insurance plans available to consumers offer different coverage amounts for different services. Most policies do not cover every medical expense. Therefore, it may save money in the end to wade through the policy offerings to make sure you have adequate coverage. In some instances, a secondary health insurance policy may be beneficial; in other situations, it might be duplicate coverage.

Specific Illness Policies

The term "secondary health insurance" is often used synonymously for supplemental health insurance and works as additional insurance that pays for services a primary health insurance policy does not cover. For example, a policy designed to cover one specific illness, such as a cancer policy, is considered secondary health insurance if the policyholder has a broad primary health insurance policy. This type of secondary policy pays benefits such as a set amount of cash directly to the policyholder in addition to whatever benefits the primary policy provides.

Using a Spouse's Policy

When a married couple both have health insurance plans through different employers, the couple may check with the insurance providers to see about coordinating coverage. If it is beneficial, one or both may use the other spouse's policy as secondary insurance. When coverage for medical expenses is needed, the primary insurance is billed first. Any expenses not covered would then be billed to the secondary health insurance policy provider.

Supplementing the Medicare Gaps

Supplemental insurance that some retirees carry to cover expenses that Medicare fails to pay is a common type of secondary health insurance. This type of secondary insurance is also called Medigap insurance, because it completes the coverage gaps that Medicare Parts A and B contain. In addition, retirees may choose to purchase a policy that provides better prescription drug coverage than Medicare Part D. This policy can be categorized as supplemental or secondary insurance, because it is in addition to the primary policy -- Medicare in this example.

Accidental Health Insurance

A standalone accidental policy is generally a secondary health insurance policy. This type of supplemental insurance pays if the policyholder is involved in an accident. The policy may have limitations based on what coverage the primary policy provides or may pay specific amounts for specific services. For example, suppose a visit to the emergency room costs the policyholder $10,000 in total charges. The primary health insurance plan then agrees to pay $8,000 of the cost. The accidental policy, the secondary insurance in this example, would then be billed for the remainder.