Why More Americans Are Buying More Than One Type of ‘Health Insurance’

A single health insurance plan may not provide enough financial protection in the event of a major medical crisis. This is especially true if a medical issue results in lost wages or costs for transportation, living modifications, ongoing care, and more.

Around 20 million people in the U.S. are already living with debt for healthcare costs they couldn’t afford to pay out of pocket, according to a 2024 survey from the Kaiser Family Foundation (KFF).

Some Americans may benefit from purchasing additional health insurance plans to cover healthcare costs their primary health insurance doesn’t cover, according to some in the health insurance industry.

“Today, we’re paying more money for our premiums for medical insurance. We’re getting less coverage, higher deductibles, [and] more co-insurance,” said Joey Bianco, consultant and insurance broker, in an interview with Bloom Tampa Bay. “These supplemental insurance plans help fill those gaps so that people are not off budget or, worse, running into financial catastrophe.”

Collectively, Americans have an estimated $220 billion in debt, according to the KFF. Fourteen million people have more than $1,000 in medical debt, while 3 million have more than $10,000 in debt.

Though standard health insurance covers treatment for cancer and other illnesses or accidents, plans supplementing a primary policy can help cover a person’s out-of-pocket costs and non-medical expenses, like childcare costs and lost wages.

Forty-three million Americans, 13.1% of the population, had multiple health insurance plans in 2021, according to U.S. Census Bureau data published in 2023.

Common supplemental plans for people with employer-based private insurance include accident, hospital, short-term disability, and critical illness insurance.

“The critical illness policy pays a lump sum when you’re diagnosed with cancer, a heart attack, a stroke, paralysis, [or] organ transplant. There’s a long list of critical illnesses,” said Bianco.

How does supplemental insurance work with Medicare?

Of the 43 million people in the U.S. with multiple health insurance plans in 2021, 14.6 million were Medicare beneficiaries enrolled in Medicare Supplement Insurance (Medigap).

Medigap is extra coverage people with Medicare can purchase from private health insurers to help cover deductibles, co-insurance, copayments, and other out-of-pocket costs for services Original Medicare covers.

Certain Medigap policies can also provide coverage for services Original Medicare excludes, such as emergency medical care.

A person with a Medigap plan will have coverage from their Medicare and Medigap policies for covered medical expenses.

U.S. Census Bureau data shows that senior adults and disabled people — two demographics eligible for Medicare coverage — purchase more than one health insurance plan at higher rates than other demographics.

Only 5.5% of adults between the ages of 19 and 64 had more than one type of coverage in 2021, but 51.9% of U.S. adults 65 and older had more than one health insurance plan, having supplemented their primary Medicare coverage.

Similarly, 4.3% of able-bodied people of working age (between 15 and 64) purchased more than one health insurance plan, while 17.1% of disabled people in the same age group did.

It’s important to note that only people enrolled in Original Medicare can add a Medigap plan to their coverage. People with a Medicare Advantage plan can’t buy Medigap.

What’s next: Do you need additional coverage?

Health insurance can’t cover all costs related to a serious illness, accident, or condition. Though it requires an extra monthly premium, having an additional health insurance plan can help Americans save money in these scenarios.

“The expenses can build up really quickly, and a major medical event can quickly turn into a major financial event,” said Bianco.

People who decide to purchase coverage in addition to their primary coverage can typically do so through Medicare or through a private insurer, often through an employer.

Whether to purchase supplemental health insurance is a personal decision that can depend on factors like age, disability status, income, and risk tolerance.

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