Gap Health Insurance

Supplemental insurance to help fill the gaps in your major medical plan
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Individual Marketplace major medical deductibles in 2020 range from $1,519 (Gold plan) to $6,506 (Bronze plan).[17]

Do you have enough money (or funds in a health savings account) to meet your annual major medical deductible if you have a covered accident or critical illness? If not, think gap health insurance.

For example, gap insurance can include critical illness + accident insurance coverage that provides a fixed lump-sum benefit as a result of a covered critical illness. This lump-sum payment can be used any way you see fit. Accident coverage is available for covered expenses incurred, up to a maximum benefit limit, whichever is less.

What Gap May Cover
  • Broken bones

  • Life-threatening cancer

  • Heart attack

  • Kidney failure

  • Stroke

  • Coma

  • Coronary bypass

  • Loss of sight, speech or hearing

  • Major organ transplant

  • Paralysis

  • Severe burn

What Gap May Not Cover
  • Preventive care such as routine physicals

  • Any non-medically necessary or experimental procedures

  • Injuries or illness related to participating in extreme or dangerous activities (rock climbing, skydiving, private aviation, etc.) or sustained at work or under the influence of drugs or alcohol

  • Medical expenses incurred prior to the policy effective date or after the expiration date

Pros and Cons of Gap Health Insurance

  • You choose how to use benefits payments – There is no restriction on how to use the money you receive, whether for medical costs or to pay for groceries.
  • Apply year-round – There is no official open enrollment period and, in most cases, coverage begins the next day after you enroll online.
  • A plan for every budget – There are different levels of coverage to meet different needs.
  • Keep your doctor – No provider network limitations for fixed indemnity plans means you can visit your preferred healthcare provider.
  • Unlike ACA plans, premiums are based on age and health – The younger and healthier you are the lower your monthly premium, conversely, older and sicker individuals will pay more.
  • Pre-existing conditions are not covered
  • Not ACA-qualifying major medical coverage – Gap insurance is a form of supplemental health insurance, not ACA-qualifying major medical coverage.

Find Answers to Gap Health Insurance Questions

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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

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.