As the saying goes, “accidents happen.” Just ask the 6 million Americans who will break a bone each year.4 You probably won’t expect an accident to happen, but that’s exactly when it will, and that is what makes accident insurance a great idea. Many people are not aware that this insurance option exists, but once they understand how helpful it can be, they certainly see the benefit.
Consider This: Health Insurance pays the doctors and hospitals when you get hurt in an accident… Accident Insurance pays YOU!
What Does Accident Insurance Do for You?
Just as its name implies, accident insurance covers accidents. Accidents are considered injuries like broken bones, burns, some sort of laceration, or other various injuries. If one of these unfortunate events should happen to you, your accident insurance will help you pay for the associated expenses. According to WebMD, the injuries listed below are the most common household accidents- meaning they could happen at almost any time! Be prepared!
5 Most Common Accidental Home Injuries
Accident insurance is a highly worthwhile investment. However, your premium will be paid month by month, and you can cancel your coverage should you decide it is no longer worth keeping. On the contrary, if you decide that this coverage is really benefiting you, many policies will allow you to keep it for a prolonged period of time. Some plans, like short-term plans, only offer temporary coverage. If you feel that you are especially accident-prone or if you just like the peace of mind of knowing you won’t go bankrupt if you get hurt, you can keep this policy long-term. What’s more is this coverage renews annually, meaning if you have a covered accident in 2015, you will be covered for another in 2016.
So this insurance is convenient because it can be cancelled at any time, and it can also last as long as you choose. But those two conveniences don’t mean much if it’s going to cost you an arm and a leg, right? With 76% of Americans living paycheck-to-paycheck in 2013,1 and a third of those making $75,000 in 2015 living paycheck-to-paycheck,2 it’s clear that most people don’t have much money to spare. This means that people are unlikely to be able to afford their medical bills should they have an accident. Accident insurance can help you drastically reduce these costs by adding on coverage that could be as affordable as $15 a month. Come on, that’s close to the price of Netflix or your Planet Fitness gym membership!3, 5
It’s likely that you already have major medical insurance, and may wonder why this information is relevant to you. Many people actually pair their major medical insurance with an accident insurance policy because it makes it more affordable for them if they experience a covered accident. For instance, if you have an accident and go to the hospital, your major medical insurance will not kick in until you have paid your deductible. Suppose your deductible is $5000- are you prepared to pay that? If that amount makes you cringe, you should know that your accident insurance would reimburse you for that $5000 as long as you chose that amount or higher for your policy.
Types of Accident Insurance Plans
Scheduled Payout Plan: Typically, this type of accident plan will reimburse you for specific services you received for your accident. These amounts are pre-determined by your policy, which means that you may receive more or less than your actual costs. For example, your stitches may cost $200, but your policy’s price for stitches is $300. You would receive $300. However, the opposite could also be true. If you have an ambulance ride that costs you $200, but your insurance policy only pays $150, you would pay the difference of $50.
Medical Expense Plan: This type of plan will usually reimburse you in full for your expenses. This plan does not require comparing your actual costs with a pre-determined price from your policy. So if you pay $200 for an ambulance ride, $200 for stitches, and $100 for an x-ray, your accident insurance provider would reimburse you $500.
What Accident Insurance Does Not Cover
As with any specific type of insurance, there are certain situations that are not covered. Accident insurance will not cover any pre-existing conditions, prescription drugs, or any general or preventative care. Additionally, many people ask if accident insurance will cover any maternity costs, and the answer is no. Sorry, even if your pregnancy was not expected, this is not considered an accident
Accident Insurance and Obamacare
With so many changes to healthcare in our country, there are a few facts that you need to be aware of when considering accident insurance:
- It cannot be purchased through the Health Insurance Marketplace. This means that you cannot go to healthcare.gov and enroll in this insurance like you can a major medical plan
- Under Obamacare (Affordable Care Act/ACA), individuals are required to have minimum essential coverage or else face a tax penalty at the end of the year. An accident plan does not count as minimum essential coverage- i.e. this plan cannot be purchased to avoid the penalty
- While there are certain insurance requirements under Obamacare, accident insurance is not required. It is most definitely a smart choice- but by no means required
- Obamacare subsidies cannot can only be used towards major medical plans, not accident insurance
What Accident Insurance Will Cover
If you already have major medical coverage, you might not see a reason to enroll in an accident insurance plan. If you’re part of the 76% of Americans living paycheck-to-paycheck, though, you might not have the money to hand over for your deductible or other expenses in the event of an accident. So what can you use the reimbursement from your accident policy to pay for?
- Your deductible. Your major medical policy will not start covering your medical expenses until your deductible is met
- Use your reimbursement for lost wages from not being able to work due to your accident, which you could put toward expenses like these:
- Mortgage/rent payment
- Utilities, credit cards, and other monthly bills that depend on your paycheck
- Groceries for you and your family
- Your health insurance premium
- Johnson, A. (2013, June 24). 79% of Americans are living paycheck-to-paycheck. Retrieved from CNN Money website: https://money.cnn.com/2013/06/24/pf/emergency-savings/
- Living paycheck to paycheck on $75,000.00 a year. (2015, May 21). Retrieved from Time website: https://time.com/money/3891735/living-paycheck-to-paycheck-high-earners/?xid=yahoo_money
- Netflix. (n.d.). Retrieved September 2, 2015, from https://www.netflix.com/
- Physical fields. (n.d.). Retrieved September 2, 2015, from Ortho info- American Academy of Orthopaedic Surgeons website: https://orthoinfo.aaos.org/topic.cfm?topic=A0027
- Membership types. (n.d.). Retrieved from Planet Fitness website: https://www.planetfitness.com/membership-types