Everybody knows someone who has complained about their high-deductible -- it might even be you! The average family has a deductible of $8,352. And that’s just the deductible; once you reach that amount, then you also need to pay for coinsurance. This means that you might have to pay 20%+ of every bill until you reach your out-of-pocket maximum. For most people, these costs are hard to bear. And this problem is compounded with soaring healthcare costs. Just a minor surgery could push you over the limit and force you into paying $12,000 for an out-of-pocket maximum.
With all the pain and complaining out there, you’d think there was no solution to the problem of high deductibles. But there is! Gap insurance is a wonderful type of policy offering protection for the gaps in medical insurance.
For starters, gap insurance is a supplemental policy. This means that you need to have a major medical policy to add gap insurance. And this supplemental policy doesn’t cover your high deductible. Gap insurance protects you against high-costing situations that would cause you to pay towards your high deductible. So even with gap insurance, there could be an event that you have to pay for (such as hospital confinement if you get a policy that doesn’t include it). Be sure to read policies well and select a plan that covers the areas you want protected.
A great aspect to gap insurance is that the benefit money is sent directly to you as a lump sum. You can use it however you’d like. You can pay towards your deductible, prescriptions, groceries, etc. This lump sum makes it attractive for some to get a benefit higher than their deductible. That way, if something drastic were to occur, they could have some spare money for daily needs.
31 million people are injured each year (and we aren’t talking about sprains and strains). Accidents leading to doctor visits and hospitalization are commonplace. People fall down the stairs, slip on a wet floor, slide on ice, and a whole slew of other unfortunate situations. Accidents have gotten pricier. The cost of a broken arm without surgery could be $2,500. A broken leg requiring surgery could be over $30,000. With a $10,000 deductible, you would have to pay the entire bill for the broken arm. With a broken leg, you would pay the $10,000 (plus more until you reach the out-of-pocket maximum) and insurance would cover the rest. Accident benefits help cover your high deductible in the event of an accident. The coverage will depend on the policy you get. You could get a cheaper policy that wouldn’t cover your entire deductible, and you can even get a policy that would pay you more than the deductible. This would allow you to have extra money for paying non-medical related bills like a mortgage, car payments, and other living expenses.
An illness can be a difficult thing to handle. If you were to have a heart attack, a stroke, be diagnosed with cancer, or have another type of serious illness, it could be the greatest trial you face in life. Paying your high deductible might be the least of your worries. Lost income from an illness would be much more detrimental. This is why critical illness can provide you with a benefit that surpasses your deductible to give you additional money for living expenses. The benefit and illnesses covered depend on the policy you want to purchase. You can get a policy with a benefit of $50,000 and if you were to get a stroke, you would receive $50,000. Make sure to read the policy and understand what illnesses are covered and what percentage of the benefit you would receive for each illness.
Accidental Death and Dismemberment
Even more extreme than a critical illness is accidental death or the loss of a limp. Losing hands, feet, your sight, and other parts of your body would be a daunting experience that might disqualify you from your current job. A benefit greater than your deductible would prove helpful in coming up with a long-term solution. Likewise, an accidental death could leave your family without a breadwinner, or it could leave loved ones with funeral costs. Having this type of provision in your gap insurance policy would help either you or your loved ones from a death or dismemberment. As you search for policies, keep in mind that some only pay 50% of the benefit for one lost member (leg, arm, sight, etc) and might require you to lose 2 parts (2 legs, 1 arm & 1 eye, etc) to receive the full 100%.
The previous provisions targeted specific situations that happen to you -- illnesses, accidents, dismemberment, death. The fixed-benefit indemnity provides a benefit for certain services you might need in the event of an accident or illness. This includes hospital stay, surgery, ambulance ride, ER visit, x-ray. A policy might provide you with $100 for an ambulance ride, $500 per day in the hospital, and $2,000 for a surgery. Depending on the policy you want, it could even include benefits for visits to the doctor’s office or a physical therapist.
Gap insurance is an effective way of protecting you from having to pay towards a high-deductible insurance policy. At the very least, it removes any reason to complain! Be sure to contact your insurance broker and learn more about options and pricing for a gap policy.