January 1, 2010

Q: At my cost and option, my new employer offers very basic health insurance, with a maximum total yearly payout of only $15,000, including hospitalization.  Although the protection is low, I would like to purchase this coverage because it is affordable and it would cover most of my small, ordinary doctor bills throughout the year. In addition, I would like to purchase major health/hospitalization insurance that would protect me in the event of a  catastrophic illness, likely with a high deductible. My question is regarding having both policies in force:  Is this acceptable?  Can an insurer reject a claim because I have another policy? My intent by having two policies is NOT to collect twice on any claim, but to have adequate coverage for both small and large medical bills.


A: There are two types of insurance that are relevant here as recognized and addressed under insurance laws: "Major medical insurance" and "supplemental insurance" are the two types of insurance that are made to overlap. You may overlap as many supplemental policies as you wish. The legal restriction is that you may not overlap two major medical policies. Insurers are required to confirm (usually with a question on the application) that you do not have other major medical insurance before they are allowed to issue a new policy. If you do purchase two major medical policies, then one company has the right not to pay and may rescind coverage under some circumstances.

Confirm that your mini-med policy is actually classified as a "supplemental policy" and then there will be no restrictions on the additional insurance you purchase. Since there is no real type of insurance called "catastrophic insurance", you probably want a major medical insurance with a very high deductible. Consider Celtic Insurance or Golden Rule. If it turns out that you are limited to supplemental policies, then try Value Health first because of its stronger benefit for potentially large hospitalization claims.


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