Costs

Supplemental health insurance policies are generally less expensive than regular health insurance. The lower cost is directly attributable to the lower benefit amounts that are offered as compared with traditional health insurance. For example, a traditional medical coverage might pay up to $1 million in total medical costs where a supplemental policy might cap benefits, for example, at $50,000. The actual dollar limit of benefits is listed in the policy.
In some cases, this is the only health insurance that an applicant can find or can afford; in these cases it is better to have some limited coverage than having no health insurance at all.
Combining policies without co-ordination of benefits
Traditional health insurance policies have a provision that allows the insurance company to reduce benefits for expenses that are paid by another health insurance policy. For example, if you break your arm in an auto accident, your regular health insurance usually does not pay because the auto insurance covers all of the medical costs.
Supplemental health insurance works in the opposite way. Using the same example, supplemental insurance would pay a cash benefit even though all of the medical bills had already been paid by the auto insurance company. The cash might be used to pay deductibles on other policies, offset lost wages due to the medical problem or might simply be used as "mad money" just help lessen the suffering of the broken arm. It does not matter what other insurance is available nor how the benefit payment is used.
This provision makes it possible to overlap coverage and essentially allows buyers to buy as much or as little insurance as they wish or can afford.
Coverage for pre-existing medical conditions
One of the attractive features of supplemental health insurance is that it provides payment for pre-existing medical conditions when many other types of insurance exclude this benefit. Typically a waiting period of six to twelve months is required before payments are available for pre-existing medical conditions on a newly issued insurance policy.
None of the supplemental insurance plans provide for payment of pre-existing prescription drug costs. If you are paying retail price for uncovered prescription drugs, consider the Competitor Rx Discount Drug Card as an inexpensive way to lower out-of-pocket costs for uninsured drug costs.