Gap Health Insurance: Filling Coverage Gaps

Gap health insurance is a supplementary health insurance policy that is usually purchased alongside a high-deductible health plan (HDHP). It helps to cover the cost of medical care and protect against unexpected medical expenses. It is often used by those with high medical costs before they have reached the deductible on their primary insurance or those in between jobs. It is also used by employers to help cover their employees' medical expenses. It is not considered a replacement for primary health insurance as it is not ACA-compliant.

Gap insurance is a group supplemental health plan

Gap health insurance is a group supplemental health plan that works in tandem with a high-deductible major medical plan. This means that it is purchased in addition to a primary insurance policy to provide extra coverage. It is often used by those with high-deductible health plans (HDHPs) to protect against high out-of-pocket expenses.

The IRS defines a HDHP as a policy with a deductible of at least $1,400 for an individual and $2,800 for a family, with total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) of less than $7,000 for an individual or $14,000 for a family. HDHPs only offer coverage after this substantial yearly premium has been met. Gap health insurance policies allow you to receive coverage on medical expenses before your deductible has been met.

Gap health insurance is particularly useful for those with high medical costs, who are in between jobs, or who are facing a temporary gap in insurance coverage. It is also beneficial for those with extensive or ongoing medical issues and high out-of-pocket costs. Gap insurance can help to pay for deductibles, copays, and coinsurance.

It is important to note that gap health insurance is not a replacement for major medical insurance and is not ACA-compliant. It is intended to be used alongside a major medical plan that is compliant with the Affordable Care Act. Gap insurance also has limited benefits and may not cover all the services that a major medical plan would, such as preventive care, lab work, and mental health treatment.

When considering gap health insurance, it is important to compare different providers and plan details to find the best option for your needs.

It works alongside a high-deductible major medical plan

Gap health insurance is a group supplemental health plan that works in tandem with a high-deductible major medical plan. It is not a replacement for primary health insurance but is used to supplement it. This is why it is often referred to as "insurance on insurance" or "supplemental health coverage".

A high-deductible health plan (HDHP) is defined by the IRS as any plan with a deductible of at least $1,400 for an individual and $2,800 for a family. HDHPs offer coverage only after this substantial yearly premium has been met. Gap health insurance policies allow you to receive coverage on medical expenses before your deductible has been met.

A gap health insurance plan pays the amount that would have been applied to the insured's main deductible. It covers the same expenses as the major medical plan, except for charges for professional fees in a doctor's office or medical clinic, outpatient prescription drugs, vision, dental, and plan copayments.

Gap insurance is particularly useful for those with high medical costs before they have reached the deductible on their primary insurance, or for those in between jobs. It can also be beneficial for employees with extensive or ongoing medical issues and high out-of-pocket costs.

It is important to note that gap health insurance may come with its own deductible, copays, and coinsurance. It may also cover fewer services than a high-deductible health plan as it is not subject to the same rules and regulations as major medical insurance. For example, HDHPs are legally required to cover mental health services, while gap health plans are not.

It helps pay for medical costs before reaching the deductible

Gap health insurance is a group supplemental health insurance plan that works in conjunction with a high-deductible major medical plan. The IRS defines a High Deductible Health Plan (HDHP) as a policy with a deductible of at least $1,400 for an individual and $2,800 for a family, with total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) of less than $7,000 for an individual or $14,000 for a family.

Gap insurance helps pay for medical costs before reaching the deductible, which has led to it being called "insurance on insurance". It covers the same expenses as the major medical plan, except for charges for professional fees in a doctor's office or medical clinic, outpatient prescription drugs, vision, dental, and plan copayments.

A medical gap plan pays the amount that would have otherwise been applied to the insured's main deductible. It follows the employer's major medical plan and pays the benefits described in the Schedule of Benefits up to a maximum benefit amount.

For example, if your major medical deductible is $1,000 and your gap plan deductible is $500, you will only have to pay $500 in out-of-pocket costs. Gap insurance can be particularly useful for those with high medical costs before reaching their deductible on their primary insurance or for those in between jobs.

While gap insurance does not help pay for monthly premiums with existing healthcare plans, it can offset the additional monthly cost by the money saved through the coverage it provides.

It's not major medical insurance or ACA-compliant

Gap health insurance is not a major medical insurance plan and does not comply with the Affordable Care Act (ACA). It is not intended to meet the requirements of the ACA. Instead, it is used in conjunction with a major medical plan that is compliant with the ACA.

"Major" health insurance plans generally refer to comprehensive and robust coverage plans, which gap plans generally are not. Gap health insurance is a supplementary plan that helps cover the cost of medical care. It is used as a secondary insurance policy, alongside a high-deductible health plan (HDHP) to cover medical expenses before the deductible is met. It is important to note that gap health insurance is not a replacement for primary health insurance.

The government does not subject gap health insurance to the same rules and regulations as major medical insurance. For example, HDHPs are legally required to cover mental health services, while gap health plans are not. Gap health insurance generally covers only unexpected high-expense medical services, such as surgeries related to heart attacks and strokes that are performed in hospitals.

Gap health insurance plans are a good option for those with high-deductible plans who want to protect themselves from high out-of-pocket expenses while paying low rates. It is also useful for those who are in between jobs or insurance plans, or those who have high medical costs before reaching the deductible on their primary insurance.

It's a good option for those with high medical costs

Gap health insurance is a supplementary health insurance policy that is usually purchased alongside a high-deductible health plan (HDHP). For 2022, the IRS defines a HDHP as a policy with a deductible of at least $1,400 for an individual and $2,800 for a family. This type of insurance is helpful for those with high medical costs before they have reached the deductible on their primary insurance or for those who are in between jobs.

A medical gap plan pays the amount that would have been applied to the insured's main deductible. This can be beneficial for those with extensive or ongoing medical issues and high out-of-pocket costs. For example, if you have a high deductible and many medical expenses, a gap health insurance plan may be a good option to consider.

With a gap plan, you can reduce your overall out-of-pocket costs. This is especially important as the cost of healthcare continues to rise, and employees' salaries may not be enough to cover both the cost of their monthly health premium and their health insurance deductible. By enrolling in a gap plan, you can ensure that you have access to the medical care you need without unnecessary hassles and delays.

Additionally, gap insurance can provide peace of mind for those with a high probability of needing high-expense medical services in the future. While you may end up paying a substantial monthly premium due to pre-existing conditions, the lump-sum payment you receive can help cover medical expenses and prevent serious disruptions to your lifestyle.

Overall, gap health insurance can be a good option for those with high medical costs by providing coverage for unexpected medical expenses and reducing overall out-of-pocket costs.

Frequently asked questions