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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Supplemental insurance in New Jersey

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.

Q: I am 64, and still working. My wife is 63 and retired last year. Question is about our medical insurance from my work, and whether there is a viable supplemental insurance available. My medical/ dental insurance costs $44/wk ($31 after tax) for both of us. There is a $600/ person deductible, then 20% co-pay per person to a maximum of $5000/person, after which the plan pays 100%. Is there a supplemental plan available in New Jersey that makes sense for us to cover that $5000/ person co-pay. Last year it was $3000, which I reached, and my wife almost reached.

A: There are some supplemental insurance policies available, but this would not be a smart approach for you. Remember that the basic premise of insurance, especially supplemental health insurance, is to ensure that the premium is set at a higher amount than the amount of claims that will be paid. In your case, this means that the premium would be more than the amount you paid in out-of-pocket expenses. This is especially true during the few years you have until Medicare becomes the primary coverage. You have good coverage at a very reasonable price that would prevent you from losing your quality of life in the event of a catastrophic claim. The two ways for you to reduce out-of-pocket expenses are: 1) make sure all out-of-pocket expenses are paid on a pre-tax basis, and 2) utilize the pre-negotiated discounts on the price of medical services utilized by Preferred Provider Organization . Properly combining the two strategies could cut the net financial effect of out-of-pocket costs in half (as compared with not using either approach). More information on these strategies is available in other postings on this Web site.


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