What is Gap Health Insurance

What is Gap Health Insurance?

Gap health insurance is a supplemental plan to your current health insurance plan. When designed right, Gap insurance can help you save money and improve benefits.

How is this possible? The main drivers of health insurance premiums are the benefits but even more specifically, the deductible. The lower the deductible, the higher those health insurance premiums rise. If designed correctly, utilizing the combination of a major medical plan with the correct gap plan, can lower your deductible to essentially $0! Think, platinum benefits at bronze prices

So how does Gap work?

A few years ago, most Gap plans were reimbursement plans. This meant you would have to submit a claim to the Gap Company. Then, after it was processed by your major medical they would reimburse you the benefits. Now, many Gap companies have their own ID cards, so that claims can be processed with both your major medical and gap carrier simultaneously. No reimbursement necessary!

Most Gap plans offer an inpatient benefit and an outpatient benefit. For example, you could have a Gap plan that covers $5,000 for inpatient hospital stay and $2,500 for outpatient benefits per calendar year. With this Gap plan if you had a $5,000 out of pocket maximum, you essentially just lowered your deductible to $0! The Gap plan will only cover whatever the major medical covers. They will follow your major medical’s benefit summary. Gap plans offer riders that can be added onto the basic plan, such as coverage for lab work and coverage for durable medical equipment.

The key is ensuring you have the right Gap and major medical combination, and this is where seasoned health insurance experts come in. The right combination can save 10% – 20% on group health insurance premiums! See our Gap 101 below, to see an example of how your gap coverage would work.

Major Medical

GAP Insurance

Less money out of pocket

Lower Premiums:
Spreading the risk
between two carriers.

Lower Deductibles &
Co-insurance: GAP covers a portion or all of these costs.

How does this work?

Major medical deductible:

GAP Coverage:
Inpatient Benefits: $3,000
Outpatient Benefits: $1,500

John isn’t feeling well and
has to go to urgent care.

Major medical co-pay: $150
Gap outpatient benefits: $1,500
Remaining GAP Outpatient Benefits:$1,350
John pays: $0

John still isn’t feeling well and
is hospitalized overnight.

Major medical hospitalization
benefits: $3,000 deductible
GAP Outpatient benefits: $3,000
John pays: $0

It’s like having…

Two different
buckets of money


Two different
gift cards
One for when you sleep in the hospital,
and one for outpatient services such as:

GAP helps lower or even covers 100%
your deductibles, co-insurance, and co-pays!