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    What is Gap Health Insurance & How Does it Work?

    4 mins

    Gap health insurance coverage is a form of supplemental insurance. That is, it is coverage meant to be carried in addition to a more comprehensive health insurance plan, usually one provided by an employer. Gap insurance can typically help you cover medical costs like copays, coinsurance, and other out-of-pocket costs – the stuff your standard insurance package won’t typically cover – until you’ve hit your deductible.

    Still have questions? It’s only natural! Keep reading for a closer look at gap health insurance, what it covers, and whether or not it’ll fit your specific needs.

    A Deeper Look at Gap Health Insurance

    Gap medical insurance helps cover the out-of-pocket costs of medical care. It is most often picked up alongside a high-deductible health plan (HDHP), which is a (usually employer-provided) insurance policy that offers lower monthly or yearly payments (premiums) in exchange for a higher deductible and point-of-service costs when seeking care.

    What qualifies as a high deductible health plan? The IRS identifies an HDHP (as of 2023) as any plan with a minimum annual deductible of $1,500 for individuals and $3,000 for families, and a maximum of $7,500 for individuals and $15,000 for family coverage.

    What Is Covered by Gap Health Insurance?

    Gap coverage offers limited benefits, covering some or all of the costs of copays, coinsurance, tests, and hospital stays, usually until your primary insurance’s deductible is reached.

    For a real-world example, you might utilize your gap health insurance to cover the copay or coinsurance charge (an out-of-pocket fee paid at point-of-service) after a visit to urgent care. Depending on the plan, it may additionally cover the cost of any medication you may’ve been prescribed during the visit, though you’ll want to review your plan benefits to be sure.

    Gap health insurance is not regulated by the Affordable Care Act (ACA), and so cost and coverage can be affected by factors like age and health status. It may or may not require that you have primary health insurance already and may have other unique limits, stipulations for reimbursement, and eligibility requirements that can all affect both your monthly fees and what the plan will cover.

    Each gap insurance plan is different, so it is vital to thoroughly review a plan before buying it to ensure it will suit your needs.

    What Gap Health Coverage Isn’t…

    Gap coverage is neither a replacement for a more comprehensive standard health insurance plan nor is it the same as short-term coverage, which can cover a health insurance gap between jobs.

    If you are in the market for insurance that will cover you between jobs or before you become eligible at your new employer, health insurance gap coverage like short-term insurance may be right for you, but its availability varies by state. Check out the insurance guide at for details specific to your place of residence.

    Who Might Benefit from a Gap Health Insurance Plan?

    Unsure whether gap insurance might benefit you? Here are some instances where it might:

    • If you have a high-deductible health plan (HDHP) through your employer and expect to reach your deductible within the year.

      • For example, if you, as an individual, have a $3,000 dollar deductible, and anticipate seeking medical care frequently enough that you will reach that amount in out-of-pocket costs, a gap health insurance plan may actually mitigate your overall cost.

    • If you anticipate frequent medical visits – for example, if your kids are prone to bringing home bugs from school, necessitating urgent care trips.

    • If you anticipate having a high-cost medical procedure within the year, a gap coverage policy may mitigate the cost in the lead-up. Be sure to review the plan policy, though, before buying in.

    • If you do not have an HSA or if your HSA balance is low. Health Savings Accounts (HSAs) are generally seen as an alternative to gap health insurance, meant to cover the high costs of medical care on your way to meeting your deductible. So, if you don’t have an HSA or if your HSA is empty and you still need care before meeting your deductible, a gap plan may work for you.

    When Is Gap Health Insurance Not Worth It?

    Though potentially useful for the right person, gap coverage is not for everyone. Let’s take a look at who might not benefit from gap health insurance coverage…

    • Those who have well-funded HSAs – as mentioned, an HSA and gap health insurance serve roughly the same purpose.

    • Those seeking mental health care. Gap insurance policies typically do not cover mental health and wellness services.

    • Those with pre-existing conditions. Since gap coverage isn’t ACA-regulated, insurance companies can raise prices if you have a pre-existing condition.

    • Those who are in generally good health and don’t often need to see a doctor.

    Ryan Hong
    Ryan Hong
    Senior Consultant, Team Lead at Bennie
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