Many people have learned the hard way that health insurancedoesn't cover every medical expense, but some credit unions areturning that problem into an opportunity by partnering withsupplemental insurance providers to convert rising out-of-pocketexpenses into expanded product offerings and noninterestincome.

Supplemental health insurance is a category of policies designedto pay out money to offset high deductibles, big copays oruncovered medical expenses members typically end up paying on theirown. The policies usually cost less than traditional healthinsurance coverage and frequently pay fixed cash amounts afterevents such as stints in the hospital or diagnoses of particulardiseases. And they can be a big relief for many credit unionmembers, according to Robert Dudacek, president of the Franklin,Tenn.-based Affinion Insurance Solutions, which partners withcredit unions to sell supplemental policies to members.

“A lot of consumers are in high deductible plans or havesignificant copays that they have to pay, so you're released fromthe hospital and you have those expenses,” he explained. “When youlook at home health care, if you need to have an attending nursecome to your house, a lot of times there is a limit on the numberof times that someone will come, or that there is an additional $50to $100 per day copay on that.”