What is Gap Insurance?

Posted June 10 2020


what is gap insuranceGap Insurance, also known as Supplemental Limited Benefit Medical Expense Insurance, is a benefit that helps to cover the exposure your employees have until they reach the maximum benefit based on that plan design. Most employers either choose a plan that will pay providers until the employees reach their medical deductible or maximum out of pocket.

What specific benefits does gap insurance provide?

The specific coverage that most gap insurance plans provide is separated into two categories (riders such as labs, in-office treatment, etc. can be added). The categories are:

  • Inpatient Services- including hospital stays, inpatient surgeries, and physician’s in-hospital charges.
  • Outpatient Services- including diagnostic exams, and other outpatient treatment of injury and sickness, provided the service is performed in a hospital, outpatient surgical or emergency facility, a diagnostic testing treatment facility, or similar facility licensed to provide outpatient treatment.

How does gap insurance work?

Gap insurance may be used to coordinate benefits with your employees’ primary insurance for inpatient, outpatient, and physician services. Benefits may be paid to the medical provider or directly to your insured employee, depending on the plan you choose. Premiums for gap insurance plans vary, according to the specific benefits you choose, but they are generally low enough that the combination of primary insurance and gap insurance will be less expensive compared to primary insurance with a lower deductible.

For employees who have relatively low deductible and copay amounts, gap insurance may not be needed, however these low deductible medical policies are not affordable for everyone, particularly small businesses. When out of pocket maximums are higher than employees can comfortably manage, gap insurance is a necessary protection that can keep them from financial disaster. Most workers who have a high deductible, high copay plan can have an out of pocket maximum over $5000. This can cause an insurmountable and unexpected financial hardship for many people and their families unless they have gap insurance to cushion the blow.

Offering an additional benefit to your workers can be seen as an investment in the performance of your company. According to Business.org, a website designed to help business owners and decision makers grow their businesses, the following are the top reasons to offer benefits to incentivize employees:

1. Increases Appeal

2. Minimizes Turnover Rate

3. Better Morale

4. Healthier Employees

5. Better Job Performance

When it comes to a group medical insurance plan, there are a lot of factors that decide the amount of coverage you may or may not want to provide to your employees, better yet, what you may or may not be able to afford. Rates seem to increase year after year, and in order to offer your workforce an attractive benefit package, you may have to get creative. That’s where gap insurance comes in, and we are here to help! Our insurance specialists are up to date with industry regulations and trends to help you and your business, and they are only a phone call away! Contact us today at 954 828 1819 or visit us online at mhginsurance.com.