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What is a Gap Plan ?

Mini-Medical plans, also known as Gap Plan , Gap Plan or Limited Medical Benefit Plans offer a viable low cost alternative to expensive, comprehensive major medical insurance.  Gap Plan are scaled down versions of major medical plans. They can be offered to employers and also to individuals through trade association Gap Plan . Such Gap Plan designs may be used as either primary insurance or supplemental (gap) coverage. Unlike comprehensive major medical insurance many Gap Plan designs do not base their benefits on actual charges incurred and actually pay based on a fixed benefit indemnity amount when various health care services are utilized. There are some expense incurred “copay” plans that do pay based on actual expenses incurred and do not pay based on indemnity benefits.


Gap Plan or Limited Plan are a multi billion dollar industry and one of the fastest growing segments of the health insurance industry in America. Gap Plans and Gap Plan have been featured in the Wall Street Journal, USA Today, the NY Times and thousands of other publications across the country.  It is estimated that more than 2 million Americans are insured through Gap Plan .
Many national employers have implemented Gap Plan such as McDonald’s, Friendly’s Burger King, Family Dollar, Waste Management, Dollar Tree, Hair Cuttery and thousands of more large, medium and small size employers.

With the costs of healthcare skyrocketing and no end in sight, many companies are canceling their major medical plans and making the transition to the limited medical realm.  Many individuals can no longer afford their cost of their individual plans.  There currently are only two choices for health insurance, major medical and Gap Plan .  Catastrophic plans are just beginning to emerge, but have limited availability and coverage. Employers and employees, and individuals prefer Gap Plan because they carry a first dollar benefit.  Such plans are not concerned with the catastrophic but the immediate costs of health care.
In today’s marketplace insurance agents and employers don’t know where to turn or look for quality Gap Plan and insurance carriers that offer a limited medical plan or Gap Plan .  It is also extremely difficult to find out which limited medical insurance carrier has the best limited medical plan design, and/or what the commission levels are and which limited medical plan or Gap Plan insurance carrier has the best customer and administrative services.

Gap Plan vary widely with some having an assignment of benefits, where the provider bills the insurance company directly, to requiring members to pay everything up front and then fill out a claim form and request their benefit. Gap Plan also range widely in their levels of coverage both in types of coverage and monetary amounts. The typical limited medical plan includes doctor’s office visits, wellness, outpatient diagnostic lab and X-Ray, emergency room for accident, hospital, surgical and usually a prescription drug benefit most often seen as a discount card. Sometimes Gap Plan   are offered with deductibles or co-payments. These plans may even include PPO Networks, vision coverage, and prescription drug coverage, a nurse line for the purpose of reducing visits to healthcare providers, lab programs and Flex 125 participation.

Gap Plan are usually very basic in nature.  Premiums often range from $20 to $190 for single coverage per month, depending on the level of benefits (family coverage ranges from $100 to $500). Gap Plan may or may not require pre-existing condition limitations, be guaranteed issue, have no medical questionnaires and no participation minimum requirements. Many Gap Plan also have a life insurance benefit.
Copay mini medical or Gap Plan , sometimes referred to as Gap Plan , provide copays and deductibles and coinsurance similar to a major medical plan but have “caps” on benefits and annual maximums, while indemnity mini medical or Gap Plan have no copays, deductibles or coinsurance.

Why offer a Limited Medical Plan?

Many employers offer a limited medical plan to employees because the majority of their employees will have no major claims and most employees will find that the limited medical plan takes care of their healthcare needs.

Below are some statistics that really support implementing a limited medical plan:
8% of covered insured have no claims
61% of covered insured have less than $1,000 in claims during the year
85% of insured have less than $5,000 in claims during the year
97% of insured never exceed $25,000 in claims during the year
5% of members account for 50% of plan costs

Benefits Offered in a Limited Medical Plan:

  • Doctors Office Benefit
  • Wellness/Preventative Care
  • Emergency Room Treatment
  • Diagnostic Testing and X-rays
  • Hospitalization
  • Surgery Benefit
  • Mental Illness and Substance Abuse
  • Skilled Nursing
  • Life Insurance
  • Dental Insurance
  • Vision Insurance
  • Short Term Disability (STD) Benefits

 

Different Types of Gap Plan or Limited Medical Plan?

There are many different types of Gap Plan .  There are two types of Gap Plan called either an indemnity limited medical plan or a expense incurred limited medical plan (expense incurred Gap Plan are sometimes referred to as limited medical copay plans) 

You can see a sample comparison at (put link here for mini-medical vs. limited medical page). 

 

  • Administrative issues – Administrative issues within a limited medical plan are extremely important.  When choosing a limited medical plan from a limited medical insurance carrier you should make sure they have a strong benefit plan, fast claims payment and excellent customer service.   It is not unheard of for some limited medical plan insurance carriers that have poor service to not respond promptly to customer service issues or take months to pay claims.  A quality limited medical insurance carrier will answer customer service calls promptly and pay limited medical plan claims fast and promptly.

 

Evaluating a Gap Plan or Limited Medical Plan?

When evaluating a Gap Plan it is very important to examine the different elements of different Gap Plan .  For example, an insurance agent or employer should evaluate the pre-existing condition limitations of the plan, the exclusions and limitations within the plan document or insurance contract and the limitations with deductibles, co-insurance and/or indemnity benefits.  On the face of it a limited medical plan may look very attractive, but when you peel back the onion you may find many hidden exclusions and limitations.  It is imperative to read the insurance contract or plan document provided by each limited medical insurance carrier.

 

What are the Target Market and Industries to offer a Limited Medical Plan?

Target Market is:

  • Part Time Employees
  • Hourly Employee
  • 1099 Contractors
  • Full Time employees who are not eligible for benefits

Target Industry:

  • Retail
  • Fast Food & Restaurant
  • Hotel & Lodging
  • Security
  • Trucking
  • Nursing
  • Manufacturing
  • Agriculture
  • Union Groups
  • Realtors
  • Franchise Groups
  • Schools
  • Staffing Companies
  • Universities
  • Nursing Homes
  • Factories
  • Many more!!!

Gap Plans are a breakthrough in the health insurance industry for the cost conscious employer. They are an innovative new concept of offering limited health benefits to blue collar, part-time and hourly employees, independent contractors and even companies canceling their major medical insurance in favor of additional savings. This is one of the fastest growing component to the insurance industry.    Gap Plan can also be offered to individuals whether employed or not, depending on the limited medical insurance carrier and the Gap Plan offered.   Gap Plan are a threshold, base health policy that has caps on all benefits and annual maximums on all benefits and which pays only Gap Plan.  These types of plans pay for nothing or offer Gap Plan for catastrophic conditions and are not liable for catastrophic losses as a major medical plan.  Gap Plan are not designed to cover such conditions as HIV, cancer, pregnancy or any major condition. Gap Plan are limited risk and liability plans. They are not major medical insurance, but are a supplemental health plan, usually filed as a hospital indemnity plan.  

Why aren’t Major Medical Plans an Option for people who enroll in a limited medical plan?

Major medical plans are too expensive for the targeted employee who would typically enroll in a limited medical plan. As already stated many employers are pushing the additional costs and rate increases for benefits onto their employees.  Costs for the employee alone can be as high as $4,800 a year for an individual for an employer who does not contribute to coverage and over $15,000 a year for the employee for family coverage alone.   These high costs are too expensive and this is why Limited Medical Benefits are extremely attractive since they can cost as little as $40.00 per employee per month.

 

Limited Medical  Industry and Insurance Carriers?:

The limited medical plan industry is the fastest growing industry in group insurance today, with over 30 limited medical plan insurance carriers in the marketplace and thousands of insurance agents and employers offering Gap Plan .  Each year new limited medical plan insurance carriers enter the marketplace.

PPO Networks and Gap Plan

It is very important to make sure you have the right PPO network implemented with your limited medical plan.  Some Gap Plan have major medical PPO networks offering the most substantial discounts at doctors offices and hospitals while other Gap Plan have discount card PPO networks which have a smaller medical network and smaller discounts.   Also, there are major differences between major medical PPO networks, where some offer greater discounts in certain regions and areas, while others may offer the best coverage in the form of the most providers participating in that specific network in that specific region or area.  It is important to choose your limited medical plan PPO network wisely, as you may find that there is no coverage in a specific area or region or very small discounts.

A limited medical plan is also known as a mini-medical plan, limited medical plan, Gap Plan plan, Gap Plan , or limited medical benefit program, limited medical program, or a Gap Plan.

 

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