Benefits are Better with Gap Plans
High deductibles may lower premiums, and are great for employees who don’t use the health plan, but what about the ones who do or will?
Gap plans offer the protection they need against higher out-of-pocket cost.
One thing to keep in mind, not all gap plans are created equal. Some plans have different coverage levels depending on if the insured is an inpatient or an outpatient. Others offer additional benefit riders that cover outpatient charges for services that were previously covered by the health plans doctor visit copay.
Conceptual Case Study 1
In the example below, this employer elected a dual option gap plan which allows the employees to “buy-up” to cover either all or most of the out-of-pocket expenses.
Conceptual Case Study 2
With this strategy, an employer can increase the deductible to lower the cost and install a gap plan to cover the difference between the higher deductible and the desired lower out of pocket.
Sample Employer currently offers his employees a $1500 deductible and $6350 max out of pocket. The employees pay the first $1500 and then pays coinsurance until they have paid out $6350, from their own pocket. The premium for this $1500 deductible plan os $650 per employee per month.
By increasing the deductible to $5000, and keeping the maximum out-of-pocket at $6350, the employer saves approximately $70 per member per month.
When you add the cost of the gap plan, in this case, $80, the plan actually increased by $10. However, the employees now have 1st dollar coverage!
For more information on gap plans, please refer to your certificate of coverage, or contact us at The General Agency.