Employer provided insurance plans are a cornerstone of the medical insurance market. Companies offer medical benefits as well as a variety of supplemental plans as a way of attracting and retaining employees. By sharing in the cost of these benefits, the company shows that it values its employees, however with the rising costs of health insurance, many companies are struggling with ways to provide coverage that everyone can afford. The most common way companies have adjusted is by adopting the more affordable option of a high deductible health plan (HDHP). These plans are designed to be lower in premium but carry a deductible of more than $1,350 but not exceed $6,650 for an individual. One of the ways to help employees cover these high deductibles is by offering a gap medical or medical supplement plan.
Bridging the Gap
These high deductibles are still far out of budget for a lot of people. Many tools are out there to help cover these costs such as Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) but probably lesser known resources is the Gap Medical Insurance. Medical Gap plans work to cover a set amount of your deductible for medical expenses. They “bridge the gap” between your deductible and what you can afford to pay out-of-pocket. You still have to pay monthly premiums for Medical Gap plans, but they can save you lots of money in the long run. For example, if your deductible is $3,000 and you have a Medical Gap plan benefit of $2,000 then you will only have to pay $1,000 out-of-pocket.
Medical Gap plans come in a wide variety of allowances, but typically cover deductibles, copayments and coinsurance expenses, prescription drug costs and other healthcare-related expenses. Some plans may even cover other expenses, like costs for living expenses, or lost wages during a hospital stay or while recovering at home from a long illness or accident.
As with any insurance plan, there is always a downside. Medical Gap plans are not major medical insurance and therefore are not subject to the Affordable Care Act regulations. Certain out-of-pocket expenses (lab work, x-rays, mental health) may not be covered under a Medical Gap plan. Many Medical Gap plans do not cover pre-existing conditions and you may still have to pay co-pays or deductibles within the Medical Gap plan. Depending on the plan design, a Gap plan may not be compatible with a Health Savings Account.
With the increasing popularity of HDHPs, Gap Insurance plays a vital role in keeping your employees afloat when trying to meet their deductible. Ultimately the money that is saved on monthly premiums can also go toward other benefits such as dental or life insurance. With options like these, companies can provide a more attractive and flexible benefits package for less than the costs that they’d incur if they were taking full responsibility for the premiums of more high-priced plans with lower deductibles.
If you want to find out more about Gap Insurance, medical supplement plans, or other money-saving options for your employees, call us at 1-800-581-6908 to talk to one of our benefit consultants.