Gap Medical Insurance Review: coverage, advantages and disadvantages

Updated: November 10, 2022
gap health insurance

Unless required by the terms of your lease or interest rates, gap health insurance is normally optional insurance coverage. However, if you recently purchased a new car, it may give you significant piece of mind. Car gap insurance benefits those with sizeable negative equity in their vehicle. These include drivers who put down little or have a lengthy loan repayment time. If you want to save your money on car insurance, one method to do it is to avoid paying for gap insurance when you don’t need it.

Gap health insurance: What is gap insurance in healthcare?

Gap insurance, also known as supplemental health coverage, facilitates meaningful health insurance associated with an HDHP. This gap plan assists employees in paying out-of-pocket expenses like co-pays and deductibles. 

A gap insurance policy is a component of a comprehensive employee benefits package. Gap plans can be structured in a wide range of ways, but they often cover copayments, coinsurance, medical insurance charges, prescription drug costs, and other health services expenses. 

Non-medical costs, like living expenses during a hospital stay or while recovering at home after an illness or accident, may be covered by gap insurance. Other gap plans may give income replacement during claim durations when persons are unable to work. Mixing gap health insurance with an HDHP may be a more cost-effective choice than giving a low-deductible plan for health insurance.

Gap health insurance: How Does it Work?

Think about the following illustration: Your car is financed, but you pay your lender $10,000. You are involved in a crash, and your car is rated a total loss. The property insurance analyst estimates that the ACV of your car is $8,000, and your provider sends you a check for that value. The extra $2,000 to pay off your car loan balance is covered by gap health insurance plans. The value of a new car begins to depreciate the moment you drive it off the lot. If you total your new car within the first few years, you may pay the bank more than the car’s value. This is covered by guaranteed loss prevention, also known as “gap” insurance.

Gap health insurance: what you should know about?

Supplements your health coverage Gap health insurance policies extend your current health care coverage and may cover certain out-of-pocket expenses.
Accident and death coverage Some gap programs pay medical costs for covered catastrophes or accidental death and injury.
Direct payments Your gap insurance policy may pay customers directly rather than to medical providers.

Do You Need Gap health insurance?

There is no particular reason to purchase coverage (gap)  if your vehicle is not financed. gap medical insurance may be an excellent idea when you finance your car, depending on how often you drive and how fast your car loses value.

Consider the fact that automobiles lose value quickly. Many automobiles depreciate by 20% period of at least the first year of acquisition, as stated by the Insurance Information Institute.

 If you choose not to put down a hefty deposit on something like a car, the price you pay will be reduced. Spending in monthly payments may fast outpace the value of the vehicle.

What does Gap Health Insurance Cover?

When your funded vehicle is destroyed, gap insurance might pay down the remaining money on your loan if you borrow more than what the vehicle is worth. Gap coverage kicks in if you finance your vehicle and file a complete loss claim after your vehicle is destroyed (the repair costs exceed what the car is worth) or when it is robbed.

 When you file a complete loss claim, your insurer will cover a maximum of the vehicle’s actual cash value (ACV). In rare situations, the amount you spend on car payments may surpass the ACV of your vehicle.

This is commonly referred to as negative equity or becoming underwater on your debt. Gap insurance, widely known as lease/loan payback insurance, assists customers in repaying their loans in this case. Note that even though your car is damaged does not mean your loan is getting canceled.

How Much Does it Cost Gap Health Insurance?

The cost of gap coverage varies but is often cheap. Gap insurance purchased from the manufacturer might cost hundreds of dollars per year. When you add gap coverage to an automobile insurance policy that already covers comprehensive and collision coverage, your annual premium will generally increase by $40 to $60.

Is it worthwhile to get Gap Health Insurance?

Taking gap insurance is unnecessary if you are not leasing or financing your vehicle. However, in just a few circumstances, gap insurance may be beneficial. Get gap insurance if:

  • You made a little deposit.
  • You do a lot of driving.
  • You bought a vehicle that depreciates rapidly.
  • You have a lengthy financial phase ahead of you.

To compute the prospective cost of gap insurance for yourself, use the following formula:

  • To determine the value of your vehicle, read Kelley Blue Book. It would help if you also calculated the value of your car after each year of tenure until your car loan has been paid off completely.
  • Analyze the terms of the loan. Assess the amount you’ll still have in payments after each year of tenure and match it to the anticipated worth of your automobile.
  • Analyze your results. The gap coverage protects avoiding the need for you to pay the difference between the price of your car and the amount you will spend in payments.
  • Determine how often gap coverage you need throughout those years.

In fact, most new automobile customers benefit from gap coverage for the first three model years of their ownership.

Should a companies provide Gap Health Insurance?

You may be thinking, as an employer, whether you should provide gap insurance. Note that having an HDHP can save you dollars on health insurance when compared to other medical plans. These savings may total up to 20% of overall expenses.

When you’re worried about the cost of gap insurance, try providing it as a supplement for employees who contribute to the coverage.  Even if the coverage costs an employee $500 per year, it remains cheaper than the copay and deductibles of the program.  Employees with ongoing medical conditions who choose gap coverage will still save money on health insurance.

Employees and employers though must review the provisions of the gap insurance plan to fully understand what is and is not covered.  Specific tests and procedures may be banned under the gap policy.  Employees must comprehend what they’re getting because the policy may exclude previous conditions in some circumstances.

 Gap Healthcare Best Affordable Plan

Medicare Medicare does not pay each medical cost. Even if you have free Part A, you must still pay a Part B premium, as well as annual deductibles & coinsurance. Most out-of-pocket costs involved with Medicare coverage are covered under Medicare Supplement Insurance.
Stand-alone gap insurance Gap insurance can be purchased separately from medical or other insurance plans through health insurers or an agent.
Employer plans As a benefit, your company may provide gap insurance. You will almost certainly not pay the total charge, but your health plan options will indeed be limited to those available for your group. To register for group supplemental insurance coverage, call the benefits administrator.

Gap Medical Insurance Best Affordable Provider

gap health insurance


Provider Name Best For
Aetna Gap Health Insurance  Best rated
Golden Rule Gap Health Insurance Best for Critical Illness
AIG Gap Health Insurance Best accident insurance
National General Gap Health Insurance Best for seniors
IHC Health Group Gap Health Insurance Best for hospital indemnity
Transamerica Gap Health Insurance Best for nationwide coverage

How to Compare Gap Health coverage?

When the time comes to look for coverage, compare gap health insurance. In most cases, you must balance the cost of coverage against the benefits you will receive if a covered event occurs. Follow these guidelines to determine the best plan for small- businesses:

Find plans available in your area Because not every insurer provides coverage in every region, narrow your search to your region or even your ZIP code.
Research the network Users don’t want to lose a cash payout because they went to an out-of-network medical. When evaluating options, search for options that cover your chosen hospitals and doctors.
Research supplemental coverage Insurance companies provide a variety of gap and supplemental insurance, such as cancer protection, critical sickness, and accidental death and dismemberment. Check each plan’s specifics to see what coverage is provided.
Compare monthly premiums It’s essential to choose a gap insurance coverage that you can afford. Sift through each plan to determine how much you’ll have to pay monthly.
Check insurer ratings Check the insurance company’s reviews and overall ratings before committing to a plan to see what customers say.

Where to Buy Gap health plan ?

Most major vehicle insurance providers offer gap insurance, though not everyone does. When you buy a vehicle, you can also receive gap coverage through your dealership or auto lender. Still, you will pay a little bit extra because the amount is added to your vehicle payments plus interest. Be careful that insurance providers only offer gap coverage as an insert to a current policy. In those other words, you can’t get a Progressive policy plus State Farm gap insurance. You must maintain your current provider.

Gap health insurance pros 

Employees and employers both benefit from gap insurance in healthcare, which includes the following:

  • Employees’ out-of-pocket payments are reduced through gap insurance. 

Employees pay less for medical costs when they use gap insurance in conjunction with an HDHP.

  • Gap insurance supplements an employee rewards program. Gap insurance could be a useful tool to introduce throughout the employment process. Employers can use gap insurance to attract and keep quality personnel.
  • A gap insurance policy can use in place of a health savings account (HSA). Employees with gap insurance had reduced out-of-pocket costs than those with HSAs. (Further on, HSAs after the jump).
  • Employers do not have to pay for gap insurance. Employers can offer to pay the gap insurance payments, but they are not required to bear any costs with gap insurance. Companies can offer it to employees who pay for it themselves as an extra benefit.


Although gap insurance is an excellent option for many businesses, it isn’t right for all. Gap health insurance also differs widely; make sure to read the fine print to understand what is and is not covered. The following are some of the disadvantages of gap insurance:

  • Gap coverage does not cover all costs. Specific out-of-pocket costs, such as X-rays, lab testing, or mental health care, may not be covered by gap insurance.
  • With gap insurance, previous illnesses may be a problem. Based on your coverage, you may be denied coverage due to pre-existing health conditions.
  • Additional fees may apply to gap insurance. Consumers may also be obligated to pay thresholds, copays, as well as other charges under a gap plan.

GAP Health Insurance FAQs

What is gap health insurance?

A gap health coverage plan is a kind of group health insurance that works together with a high-deductible catastrophic care plan.

What is the best health insurance?

According to accessible state data from the National Committee for Quality Assurance, these two highest-rated health insurance companies are Blue Cross Blue Shield (NCQA) & Kaiser Permanente.

What is a gap exception?

A gap exception (formerly referred to as a gap waiver, network shortfall, in-for-out, etc.) is indeed a petition to respect a patient’s in-network benefits when seeing an out-of-network practitioner. Depending on the patient’s policy benefits, this may be advantageous.

How much does gap health insurance cost?

When you add gap coverage to an automobile insurance policy that already covers comprehensive and collision coverage, your annual premium will generally increase by $40 to $60.

How does gap health insurance work?

A medical gap insurance plan covers the amount assigned to the policyholder in their serious medical coinsurance and deductible. Except for professional fees in a medical clinic or doctor’s office, vision, outpatient prescription pharmaceuticals, dentistry, & plan copayments, it covers the same expenses as a major medical plan.

How long can you have a gap in health insurance?

If you encounter more than one gap in a calendar year, the modest coverage gap exemption is only applicable to the first one.

Is gap health insurance worth it?

The answer is straightforward: in some circumstances, buying gap insurance can help you save a lot of money on medical bills by lowering incredibly high out-of-pocket costs.

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