Gap Insurance 101

Gap medical insurance is a type of health insurance policy that is designed to cover the “gap” between the amount that an individual owes for their medical expenses and the amount that their primary health insurance policy covers.

Gap insurance can be purchased as a standalone policy, or it may be offered as an additional benefit by some employers or health insurance providers. It is particularly useful for individuals who have high-deductible health plans or who anticipate high medical expenses.

Example: if a person has a health insurance policy with a deductible of $2,000 and they receive medical treatment that costs $10,000, their primary health insurance policy will cover the first $2,000 of the expense, leaving the individual responsible for the remaining $8,000. Gap insurance can help to cover some or all of this “gap” in coverage, reducing the financial burden on the individual.

Below are the 3 C’s: Coverage, Cost, and Consideration

Coverage:

Gap health insurance policies vary in terms of what they cover, but some common benefits that may be included are:

1. Deductibles
2. Copayments & Coinsurance
3. Out-of-network coverage
4. Critical Illness coverage

It’s important to note that gap insurance policies vary in terms of what they cover and how much they pay out. Before purchasing a gap insurance policy, it’s important to read the policy’s terms and conditions carefully to understand what is covered and what is not.

Cost:

The cost of gap insurance can vary depending on several factors, including the level of coverage you choose, your age, your health status, and where you live.

In general, gap insurance premiums are typically lower than the premiums for comprehensive health insurance policies. The cost of gap insurance may also be affected by the deductible and coinsurance amounts you choose, as well as any other benefits or riders you add to your policy.

The cost of gap insurance may also vary depending on the insurer you choose. Some insurance companies may offer lower premiums for gap insurance than others, so it’s important to shop around and compare prices from different insurers.

Overall, the cost of gap insurance can range from a few hundred to a few thousand dollars per year. However, it’s important to remember that gap insurance is designed to cover the “gap” in coverage between your primary health insurance policy and your out-of-pocket expenses, so the cost may be worth it if you anticipate high medical expenses or have a high-deductible health plan.

Consideration:

A medical gap insurance plan may be a good option for individuals who have high-deductible health plans or who anticipate high out-of-pocket medical expenses. Here are some specific situations where you may want to consider a medical gap insurance plan:

1. You have a high-deductible health plan: If you have a health insurance plan with a high deductible, you may be responsible for paying a significant amount out of pocket before your insurance coverage kicks in. A gap insurance plan can help cover the costs that you are responsible for, reducing the financial burden on you.
2. You have a chronic medical condition: If you have a chronic medical condition that requires frequent medical treatment, you may face significant out-of-pocket costs. A gap insurance plan can help cover some of these costs and make it easier for you to afford the care you need.
3. You anticipate high medical expenses: If you anticipate that you will have high medical expenses in the coming year, such as if you are planning to have surgery or are expecting a baby, a gap insurance plan can provide additional financial protection.
4. You want additional coverage for specific medical needs: If your primary health insurance policy does not provide coverage for certain medical needs, such as critical illness coverage, a gap insurance plan can provide the additional coverage you need.

Ultimately, whether you should consider a medical gap insurance plan depends on your individual needs and circumstances. It’s important to carefully consider your health care needs and budget, and to compare different insurance plans to find the one that best meets your needs.

Takeaway

Gap health insurance policies are not standalone insurance policies. Instead, they are supplementary insurance policies that are often purchased alongside HDHPs. Not everyone needs a gap insurance policy. In particular, individuals with very high deductibles will benefit most from gap insurance policies. Gap insurance policies help alleviate the financial burden of high deductibles, and when purchased intelligently, they can result in lower medical expenses even during years when serious medical problems don’t occur. If you decide a gap health insurance plan is right for you, be sure to work with an efficient insurance company that takes a digital-first approach.

 

For any more questions please feel free to reach out!

• Eleanor Schroeder

Posted by John Hansbrough in Employee Benefits, Health Insurance, Healthcare, Human Resources, Learning and Development