What Is a Major Medical GAP Plan?
A GAP plan is a supplemental insurance product designed to work alongside a major medical health insurance plan. It may help cover expenses that fall within a health plan's deductible and out-of-pocket maximum. When an employee receives covered medical services, the GAP plan may reimburse a portion of the deductible or coinsurance costs — depending on the specific plan design. This can help reduce the employee's out-of-pocket burden when they use their health insurance.
How Businesses Use GAP Coverage
Many businesses consider GAP coverage as part of a broader benefits strategy. A common approach involves:
- Moving to a higher-deductible major medical plan, which may have lower premiums
- Adding GAP coverage to help offset the higher deductible for employees
- The combined approach may help manage overall premium expenditure
- Employees may benefit from reduced out-of-pocket costs on covered services
Potential Benefits for Businesses
Depending on the plan design and carrier, GAP coverage may offer several advantages:
- May help manage overall health insurance premium costs
- Can help maintain employee satisfaction despite higher deductibles
- May support employee retention by reducing out-of-pocket financial stress
- Relatively simple to administer alongside existing major medical coverage
- Can be customized based on the deductible and out-of-pocket structure of the health plan
What GAP Plans Typically Cover
GAP plan coverage varies by carrier and plan design, but common covered expenses may include:
- Deductible expenses — reimbursement for costs applied to the major medical deductible
- Coinsurance expenses — help with the employee's share of costs after the deductible
- Out-of-pocket maximum expenses — coverage up to the plan's out-of-pocket limit
- Some plans may also include first-dollar benefits for specific services
Could a GAP Strategy Fit Your Current Plan?
If your business offers a major medical health plan with a significant deductible, or if you are exploring ways to manage premium costs while maintaining meaningful coverage for employees, a GAP plan review may be worthwhile. A complimentary 15-minute review with Scott Reinhart can help you understand your options — with no cost and no obligation.
For educational purposes only. Products, features, premiums, benefits, limitations, and availability may vary by carrier and state. This material is not a guarantee of coverage, savings, tax treatment, or future results and is not tax, legal, or accounting advice. Consult your tax and legal advisors.