Gap Health Insurance FAQ

Gap Health Insurance FAQ

What is gap insurance?
Is gap insurance ACA-compliant?
Are pre-existing conditions covered by gap health insurance?
Do I need to be enrolled in a major medical plan to buy gap insurance?
How much does gap insurance cost?
What does gap insurance cover?
How does gap insurance work?
Who should get gap insurance?
Am I limited in how I can use my medical gap insurance payments?
When can you get gap insurance?
Will gap health insurance benefits be paid only if I visit certain network providers?
Will my gap health insurance benefits be paid to me?
Is there an annual or lifetime maximum limit to the gap health insurance policy?

What is gap insurance?

Here, “gap” insurance refers to a category of supplemental health insurance products. These types of plans may pay lump sum benefits when you experience a covered accident or illness. This type of plan is designed to supplement your major medical insurance plan coverage, not replace it.

Generally, gap health insurance benefits can help cover out-of-pocket expenses (such as deductibles, copayments or coinsurance) that you may incur before your major medical insurance plan begins paying its share of your covered expenses.

Please note that the type of supplemental gap insurance described here is not the same thing as a Medicare Supplement (“Medigap”) plan. Individuals that are not eligible for Medicare may still be able to obtain a supplemental gap policy.

Is gap insurance ACA-compliant?

No, gap health plans are not qualified health plans under the terms of the Affordable Care Act (ACA). Rather, they are designed to supplement the benefits you receive from your ACA plan.

Are pre-existing conditions covered by gap health insurance?

Generally, no. Healthcare expenses related to pre-existing conditions are not covered by medical gap plans.

Do I need to be enrolled in a major medical plan to buy gap insurance?

Typically, yes. Medical gap plans are designed to help cover out-of-pocket expenses associated with a major medical plan, not as a stand-alone insurance plan.

How much does gap insurance cost?

The premium amount for your medical gap insurance plan is based on factors such as your:

  • Chosen plan benefits
  • Age
  • Health status
  • Location

Because gap health insurance policies offer limited benefits rather than the same coverage as ACA plans, premiums for this type of plan are typically lower than ACA plan premiums.

The best way to learn about medical gap insurance premium costs and coverage options is to obtain a medical gap insurance quote. Or call 888-855-6837 to speak with a licensed agent.

What does gap insurance cover?

Benefits are based on the specific medical gap plan you choose. To understand exactly what is covered and what is excluded, carefully review any policy you’re considering purchasing.

In general, many gap health insurance plans provide benefits for the following types of illnesses and accidents:

  • Life-threatening cancer
  • Heart attack
  • Stroke
  • Kidney failure
  • Coronary bypass
  • Coma
  • Broken bones
  • Severe burn
  • Paralysis

The above lists are only examples. For more details about available plan options, call 888-855-6837.

How does gap insurance work?

If you experience a covered illness or injury, with some gap policies, you receive a lump sum benefit payment that you may use to help cover out-of-pocket expenses associated with your major medical plan, such as deductible, copayment and coinsurance amounts. Once your medical gap policy has paid the maximum benefits allowed under the plan for the year, no more benefits are available until the next policy year.

No Coordination of Benefits
Your gap health insurance benefits ordinarily do not coordinate with your major medical insurance coverage. Coordination of benefits is the process of determining which insurance benefits will be applied first, second, third, etc., when you have multiple insurance plans.[1]

Rather, your medical gap plan benefit amount is determined by the eligible expenses you incur and your policy’s benefit limit, rather than being based on the amount not covered by your ACA plan.

Gap Health Insurance Examples
Let’s say you’ve purchased a medical gap plan that has a lifetime limit of $10,000 in benefits for covered illnesses or injuries, and are enrolled in a bronze plan with the average 2019 deductible of $6,258.[2]

If you suffer a heart attack and incur the typical hospitalization and related costs of $20,246 associated with this condition,[3] your medical gap policy will pay $10,000 in benefits. You will still have $10,246 in costs, most of which will likely be covered by your major medical policy after the deductible has been satisfied.

Now let’s look at how that same medical gap plan would pay benefits for another, less-costly eligible expense.

If you break your arm and incur the average costs of $2,500 for non-surgical treatment,[4] your medical gap policy will pay $2,500. As long as you continue to pay your gap health insurance premiums, your policy will have $7,500 available to be paid as benefits for future expenses associated with an eligible illness or injury.

Who should get gap insurance?

As high deductible health plan (HDHP) enrollments become more common,[5] many people may find medical gap insurance helpful in covering some out-of-pocket costs not covered by their major medical insurance plan.

For 2020, any plan with a deductible of at least $1,400 for an individual or $2,800 for a family is considered a HDHP.[6] An individual may incur up to $6,900, and a family up to $13,800, in out-of-pocket costs (including deductibles, copayments and coinsurance), before reaching the plan’s annual out-of-pocket maximum, at which point eligible expenses are paid by the insured’s major medical plan.[7]

Because you pay more healthcare costs yourself with an HDHP,[8] gap health insurance can help you cover your portion of expenses until you’re able to access your major medical plan’s benefits.

Am I limited in how I can use my medical gap insurance payments?

No, generally you are not restricted in how you use your benefit payments. Use your payments to cover your deductible, coinsurance or copayments, or personal expenses such as housing, transportation, groceries or childcare – it’s up to you.

When can you get gap insurance?

For individual insurance policies, there is typically no annual enrollment period for medical gap insurance; you may apply for coverage at any time. Applying online is a quick process, and coverage may begin as soon as the day following your enrollment if your application is accepted.

Get an instant gap health insurance quote for details about different coverage levels and pricing to meet your needs.

Will gap health insurance benefits be paid only if I visit certain network providers?

Medical gap plans usually do not limit benefit payments based on doctor and hospital networks, so you are free to visit your preferred healthcare provider. Be sure to check specific details for any gap health insurance policy you are considering purchasing.

Will my gap health insurance benefits be paid to me?

You may choose to have your medical gap insurance benefits paid to you or to your provider.

Is there an annual or lifetime maximum limit to the gap health insurance policy?

Yes, some medical gap insurance plans have a lifetime maximum limit on the benefits they will pay for eligible expenses. The lifetime maximum limit amount for your policy is determined by the plan you choose.

If your policy has a lifetime benefits limit, once the policy has paid its maximum amount of benefits, the policy will terminate. If your policy has an annual limit, once you’ve reached your benefits limit for the policy term, you won’t have access to benefits until it’s time to renew your policy. Remember, you could have a limitation on coverage for pre-existing conditions with new or renewed policies.

Independence American Insurance Company and/or Madison National Life Insurance Company, Inc. may underwrite the products referenced on this website. Legal Disclaimers.

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