It’s an increasingly common dilemma.
Your employees want a traditional low deductible plan. But with prices going up, your budget is calling for a high deductible plan.
A Gap Plan could be the way to provide the coverage your employees want at a price that makes sense. Here’s how it usually works:
You get a major medical insurance plan with a high deductible. Most gap plan benefits would not work with Health Savings Accounts (HSA), so you’d want to take a more traditional plan and just raise the deductible (a $5,000 deductible would be common). In South Carolina, we like to utilize Vital Access plans from Carolina Care Plan or the HD-HRA plans from Blue Cross Blue Shield.
Now you’ve got coverage for major medical, but you’ve got this big gap to bridge before most of the benefits really kick in for your employees. You fill some percentage of that with a separate health insurance plan that covers expenses from, say, $1,000 to your $5,000 deductible. Can you tell why we call these “gap” plans?
Gap plans can be customized any number of different ways, so you can choose the benefits you want. For example, you could buy one that only covered in-patient hospital expenses, or you might choose to also cover out-patient surgeries, physician office benefits, etc. Obviously the price will vary depending on the coverage you choose.
Nope. Our Gap plans won't help you at the mall.
You can also choose benefit amounts. In our example, there was $4,000 in benefits available to employees. So an employee would pay the first $1,000 (this is, or was, the most common deductible on group plans), then the gap plan would pay until the employee was at $5,000, after which the major medical plan pays covered expenses. Of course you could choose to start the gap plan at $2,000 or some other amount.
You get the idea. You’re getting the significant price savings of a higher deductible plan, and inserting a much less expensive gap plan to help, well, fill in that gap. Because their potential claims are limited, the gap plans aren’t nearly as expensive as the traditional major-medical plan. So the gap plan might allow you to have your cake and eat it too.
If you’d like to explore the possibility of utilizing a gap plan for your small business, we invite you to contact us today.