What Is Secondary Insurance, and Is It Necessary?

Is secondary insurance useful — or necessary? If you already have an insurance plan, you may think a second one will be an unnecessary added expense. But any insurance will eventually pay off, though not always financially.

As seen in a review of medical research examining the impact of health insurance on health outcomes, those with health insurance were more likely to undergo preventive screening than those without, among other findings.

In this article, we’ll answer the question, “What is secondary insurance?” so you can decide if it’s right for you. We’ll cover how it works, who it can help, and the various types.

Key Takeaways

  • Secondary insurance is a supplemental policy that helps cover expenses not covered by primary insurance.
  • Benefits of secondary insurance include wider coverage, coverage for injuries and unexpected events, cancer care, and help paying deductibles and co-pays.
  • Coordination of benefits rules help determine which plan is the primary and which is the secondary.
  • Types of secondary insurance include vision, dental, cancer, disability, critical illness, AD&D, hospital indemnity, and long-term care.
  • When considering a secondary policy, one should consider the premium costs vs. potential benefits in addition to provider network restrictions etc.
what is secondary insurance

What Is Secondary Insurance?

Secondary health insurance is a separate policy from your first or primary insurance. It can be a second medical plan with different coverage, or it could be a dental plan, vision plan, or accidental injury plan, to name a few.  

Whether primary or secondary, insurance serves as a safety net. It helps you and your family recover from bad experiences, from theft to an accident, to an illness that requires a hospital stay. 

When you buy insurance, your insurer will issue you a policy as proof of coverage. This document outlines the specific services and situations that your insurance provider will cover and details how they will compensate you or a beneficiary in the event of a loss.

It’s important to note that certain organizations and educational institutions may have their own specific regulations and guidelines when it comes to the insurance plans they sponsor. Therefore, policyholders should exercise caution and pay close attention to the procedures and requirements when filing a claim. This will ensure that the claim is processed smoothly and that they receive the benefits they are entitled to.

No matter which insurance plan you choose, the “coordination of benefits” rule ensures that both of your insurance providers work together to prevent duplicate payments on a single claim.

In addition, it’s a common misconception that having two different insurance policies will result in double the reimbursements or payments. In reality, this is not the case. 

However, having multiple insurance policies can help reduce the amount of money you have to pay out of pocket compared to having only one policy. This can be especially beneficial in situations where one policy may not cover all of the expenses, as the second policy can help cover the remaining medical costs.

Why Is Secondary Insurance Important?

We all know how important health insurance is. In fact, it’s been shown that if any family member is uninsured, the whole family can be financially and emotionally affected if medical issues arise.

But can the same be said of secondary insurance? Here’s a look at why secondary insurance is important.

Additional Cost Coverage

As mentioned earlier, secondary health insurance comes into play when your primary insurance has paid for everything it promised to cover, according to the terms of your policy. So if you have additional health care costs, your primary insurance won’t cover them. 

Let’s say you require an extended hospital stay exceeding the days your primary insurance policy covers. In this case, you could be faced with paying the additional expenses out of your pocket. Similarly, if you need to see a specialist who is not in the network of your primary insurer, you may have to bear the cost of the consultation. 

Luckily, secondary insurance can alleviate these financial burdens, as your secondary insurer can step in to cover the costs your primary policy does not cover. So, it’s always a good idea to explore obtaining secondary insurance to ensure you have additional coverage and peace of mind.

Care for Injuries and Other Unexpected Events 

Recovering from an accident and serious injuries can often lead to health care costs that quickly add up, such as physical therapy sessions and further testing to monitor your recovery.

If they exceed what your primary insurer will cover, secondary health insurance can make up some or all of the difference.

Cancer Care

Treating and managing any kind of cancer is expensive, especially with the focus being not just on medical but also on psychological and social problems. Failure to address psychosocial issues can compromise the effectiveness of healthcare, and addressing such issues can add to the costs.

Secondary insurance can help, even if it will cover only doctor’s visits or transportation. 

Deductibles and Co-Pays

Some insurance companies will require you to pay a certain amount each year for health services before they start covering anything. This is called a deductible. 

With other companies, you’ll have to pay a certain amount at the time of a service, such as a flat fee for a consultation with a doctor or specialist. You may even have to pay a percentage of your medical bills on top of your deductible. 

The former is a co-payment (or co-pay), while the latter is co-insurance. As you can tell, these are all added expenses, and, beyond the co-pay and deductible, there’s no way to tell how much you’ll end up paying. 

Secondary insurance, though, can help shoulder some of these added expenses as long as it’s within the terms of your policy.

Wider Coverage

Insurance companies have their own network of healthcare providers to manage costs effectively. Without a network, insurance premiums may fluctuate monthly, making it difficult to maintain a monthly budget.

In case you or a family member needs to see a doctor, your insurance provider will either cover the entire cost or a portion of it. 

However, if you choose to visit an out-of-network provider instead of a preferred one, you may have to pay for the visit yourself. Having secondary insurance can give you access to a wider network of providers, giving you more choices for hospital visits and consultations.

How Secondary Insurance Works

So how does secondary health insurance work? Many individuals are used to having only one insurance plan, so it’s only natural that the idea of having two can be a little confusing. 

First things first — you don’t get to choose which is your primary and which is your secondary. Instead, certain rules help with the coordination of benefits. 

The rules will change depending on your situation and specific health insurance companies, but some stay the same. 

For instance, if you’re a student, you may be a beneficiary in a parent’s health insurance plan while also having an insurance policy that your school sponsored. In this case, the latter is your primary insurance, and the former is your secondary. 

Or you may have Medicaid or Medicare coverage along with your insurance plan. In this case, your insurance plan is the primary, while Medicaid (or Medicare) is the secondary. 

Whatever your situation, secondary insurance will only kick in once your primary insurance is finished paying what bills it owes. 

So when you or your healthcare provider (such as a hospital or clinic) puts in a claim, it will go to the primary insurance company by default. Said company will review the claim, and then pay what they owe, according to your plan’s coverage. 

Afterward, the primary insurer will send the claim to the secondary insurer, often noting what the former has paid for. The latter will review the claim as well before paying its share of the bill, again depending on the terms of coverage. 

This doesn’t mean you won’t have to pay anything, because the healthcare provider may charge you what’s left of the bill if there are still costs that neither insurer covers. 

Take note, too, that if your primary insurer did not approve your claim in the first place, your secondary insurer might not have to pay either. To ensure this doesn’t happen, make sure you read everything when shopping for insurance.

Types of Secondary Insurance Policies

As mentioned above, a secondary insurance policy isn’t just another one with different coverage. It can also refer to supplemental insurance plans that will help pay for healthcare costs not covered by your primary insurance plan. 

These include the following: 

types of secondary insurance policies

Vision Insurance

As you can tell from the name, a vision insurance plan can help pay for routine eye checkups, prescription glasses, and even contact lenses. 

Dental Insurance

As with the above, this type of insurance plan can help cover preventive services such as teeth cleaning and certain X-rays. Depending on the policy, it may even pay for some specialized dental services, like dental implants or braces.  

Cancer Insurance

If you are diagnosed with cancer, this type of insurance may provide money to offset costs of care, like extra doctor’s visits and laboratory tests. 

In some cases, it’s up to you how to spend the money you receive. This means you could even use it to pay for things like mortgage payments and utility bills. 

Disability Insurance

Getting this type of insurance will mean that if you are severely injured and can’t work for some time, you can receive a portion of the wages you lost as a result. Such policies offer either short-term or long-term coverage.   

Critical Illness Insurance

As with cancer insurance, this type of insurance will pay if you are diagnosed with a critical illness, and you can typically use the money however you want.

Accidental Death and Dismemberment

Also known as AD&D, this type of insurance plan offers coverage should you lose a limb or a function, such as your hearing, or — in the worst-case scenario — if you die in an accident. 

Insurance companies that offer AD&D pay the coverage through a lump-sum payment that you or your beneficiaries can use in any way.

Hospital Indemnity

If you have a hospital indemnity insurance policy, your insurer will provide you with a fixed amount of payment if you are hospitalized, and there are no restrictions on how you use that payment. You can use it to cover your insurance plan’s deductible, pay for medications or transportation, or even for home care services, if necessary.

Long-Term Care Insurance

Policyholders with this kind of insurance won’t have to worry about the costs of staying in a nursing home, or if they have to hire a home nurse to help with daily activities later on in life. 

How to Determine if Secondary Insurance Is Right for You

secondary insurance factors to consider

As you can see, there are certain benefits to secondary health insurance. Families with children with special healthcare needs, for example, found that secondary insurance is helpful in covering the gaps in coverage left by their primary provider.

However, since everyone’s medical needs differ, getting secondary insurance may not be the best decision. It’s important that you don’t make snap judgments based on how appealing a second plan looks on paper.

Although having a secondary insurance plan can offer long-term benefits such as lower overall out-of-pocket costs, it is important to consider the added expenses of having two plans, including premiums and co-pays.

If managing two premiums and two deductibles is not financially feasible, then getting secondary insurance may not be your best option. Additionally, having two different insurance networks can become confusing and difficult to manage, especially if you are already having trouble keeping track of one provider network. 

However, if the secondary insurance plan has a low premium and deductible, a wide provider network, and reasonable co-pay or co-insurance rates, it may be worth getting. 

When deciding for or against a secondary insurance plan, there are a few things to consider to help in the decision-making process. 

  • How does a secondary insurance plan coordinate benefits with your primary insurance? Determine if there are any restrictions or requirements for filing claims.
  • Does your secondary plan have a high deductible? 
  • What kind of medical care will you need, both in the present and future?
  • Do you get injured regularly, for any reason (sports, car accidents, etc.)? 
  • Do you play risky sports or participate in risky activities (e.g., skydiving) 

Frequently Asked Questions

What Is Secondary Insurance?

Secondary insurance is an insurance plan that comes into play after your primary insurance provider covers their part of your health care bills. The term also refers to supplemental insurance plans, such as dental insurance and disability insurance. 

Is There a Benefit to Secondary Insurance?

Secondary insurance offers several benefits, such as wider health care provider coverage and lower out-of-pocket costs in the long run. However, secondary insurance isn’t for everyone. If you already have a high deductible or a high premium for your primary insurance policy, for example, you may struggle to pay for a second one. In such cases, it may be better for you to forego secondary insurance. 

Can You Have Two Life Insurance Policies?

Yes, you can take out more than one life insurance policy, especially if you want to get as much coverage as possible for any financial responsibilities and your current policy isn’t enough. However, it’s not always advisable to have more than one. Your premium will be based on the information you provide when taking out a policy, so there’s no guarantee you’ll pay the same rate for both. There’s a chance, too, that you’ll be older when you take out your second life insurance policy, so you may have to pay a higher premium to ensure the policy is fully paid off. 

How Many Health Insurance Policies Can a Person Have?

You can have multiple health insurance policies, e.g., health insurance through your employer, disability insurance, and hospital indemnity. You can’t claim the same expenses from all your insurance providers, but you can use all three for one claim. For example, if you were in a car accident and needed to amputate your foot, your health insurance may cover part of your hospital bills. Hospital indemnity would cover some or all of what’s left, and you’ll receive some money to pay for your needs while you’re still unable to work.

Final Thoughts

Now that we’ve answered the question of “What is secondary insurance?” you can see that it’s meant to work with your primary plan, offering potential benefits you otherwise would not see. And given healthcare costs, it’s hard to ignore the appeal of any plan that can potentially offset some or all of those costs. 

Several types of secondary insurance plans can help lessen the burden of medical care while others may add to it. Deciding whether or not another health plan is worth the investment will depend on your needs.

This means researching the different plans you’re eligible for and then carefully considering all angles. So factor in your current and potential medical needs, any activities you participate in, and — last but not least — what your primary insurance plan covers.

If you crunch the numbers and determine that the benefits of having secondary insurance are worth the extra costs, then go ahead and sign up for that extra insurance coverage. But if the costs outweigh the benefits, don’t sweat it — you can skip the second health plan without any regrets.