High-deductible health plans are becoming a lot more common, which means more of us have to pay much higher out-of-pocket expenses before the insurance actually kicks in and starts to pay the bill. High deductibles are how costs have been shifted to employees and individuals in order to keep monthly premiums low. The problem is that these high deductibles make people feel like they don’t really have health insurance.
The question for many employers is whether anything can be done about high deductibles. The answer is – maybe. Because deductibles are so high, the idea of having an insurance policy for the high deductible is now being considered a viable option for company benefits plans.
Many employers are now more likely to offer gap insurance coverage as part of their benefits packages to help reduce the pain of high-deductible health plans for their employees. If you offer this type of coverage to employees, it can reduce the need for them to tap into savings and income to pay for medical care if the need arises.
It’s sort of like insurance for insurance and is structured to cover deductibles, co-payments, prescription drug costs and other health-related expenses. And premiums can be very affordable, which makes these plans attractive.
What about HSAs?
Another option is Health Savings Accounts (HSAs). An HSA should be evaluated as a way to deal with high deductibles and other out-of-pocket medical expenses. The downside is the amount of money it takes for an HSA to be of any real value. If as an employer, you do not help to cover the costs of HSA contributions, it can often be too costly for an employee to fund effectively.
But the employee or employer that can’t fund hundreds of dollars a month in HSA contributions can still probably manage to pay the $50 or so per month to cover gap insurance premiums which makes them an appealing option.
Is gap insurance a silver bullet for high-deductible health plans?
It’s not perfect by any means. Gap insurance can involve underwriting and health questions and that means coverage can be denied because of health reasons. Gap insurance is not covered by Affordable Care Act rules that prohibit denying coverage due to preexisting health conditions. And certain types of care are often not covered, such as mental health, x-rays and lab work.
All that being said, medical gap insurance remains a good option for many companies to address the issue of high-deductible health plans. You should consult a reputable insurance professional and read the fine print before you make your decision about gap insurance for your company.
