What Is Group “GAP” Insurance?

shutterstock_174966584 - CopyGroup Supplemental Health plans – called “GAP” plans – are used to fill in holes in high deductible health plans (HDHPs) offered to workers today.  They’re similar to the “Medigap” supplemental insurance plans millions of Seniors purchase each year to fill in holes in Medicare parts A&B.

These plans are considered “excepted benefits” under ACA meaning that they operate outside many of the rules of Obamacare.  They are offered only as supplements to existing major medical plans and only cover certain inpatient and outpatient deductibles and coinsurance costs.

Most GAP plans cover neither the professional fees in a doctor’s office nor the costs of outpatient prescription drugs.  Because of this, Advisors generally recommend Employers purchase at least a Bronze major medical plan with doctors office and prescription copays to complement any GAP plan.

“1st Dollar” GAP

This GAP format offers 1st dollar benefits coverage for both inpatient and outpatient deductible and coinsurance costs.  Generally, Advisors design this format to cover up to $6500 inpatient benefits and between $2500 and $4000 of outpatient services.

In order to make 1st dollar GAP affordable, it is almost always age rated, and generally excludes certain services.  Mental illness and substance abuse are generally excluded.

Bottom line:  With 1st dollar GAP, Employees are provided full inpatient benefits.  They can also be covered on most outpatient benefits up to $4000 but are still responsible for remaining outpatient deductibles.  When paired with a Bronze plan, Employers can save money and employees can get 1st  dollar rich benefits they haven’t seen in years.

“Upfront Deductible” GAP

This GAP strategy is based on the HRA model:  Employers buy a high deductible plan (generally Bronze + Doctors OV and RX copay plans) then provide some, but not full deductible and coinsurance GAP coverage.  Example:  Employer provides a $6500 deductible major medical plan  plus $5000 Upfront Deductible GAP.  Employee pays a $1500 deductible then GAP covers the remaining $5000 deductible.

Bottom Line:  Employers save money by using a Bronze plan plus offering several upfront deductible GAP options for employees to pick and purchase. Learn more – contact us.

Four Critical Strategies in Combating Rising Benefits Costs

employee benefits graphicEmployers are facing ever-increasing challenges in controlling costs while attempting to offer competitive benefits. A recent study indicates that healthcare costs will continue to grow faster than inflation at a rate of over 4%.

While there’s no silver bullet in combating rising healthcare costs, there are a variety of factors that can be identified. Knowing what’s driving up your healthcare costs can help in finding ways to control these costs without gutting your benefits offerings. These include the rising costs of procedures, especially among specialists, the increasing cost and quantity of prescription medications being dispensed, the advent of newer and more refined technological aids, patient inclination to seek out rapid care, and more. But what can we accomplish with this information?

Understanding where these excess costs are coming from will allow you and your benefits advisers to identify specific coverages or elements of a plan that can be reduced or eliminated. Often the amount you save will be significant enough that some of that money can go back into the benefits system for other, less costly services. It’s certainly a strategy of balance, and of finding ways to make your dollars go as far as they can for the company and those who work within it. Four of the key benefits choices to control costs include:

1. Level-funding company healthcare costs.
2. Provide a proactive wellness initiative.
3. Use a flexible contribution arrangement (FSA).
4. Use deductible exposure mitigation vehicles (HRAs).

Does your executive team and/or HR department understand these strategies and what they offer your organization? Are you aware of which ones you’re already using? Do you know which aspects of your benefits program prove least and most effective in terms of dollars spent? These are critical questions that should be asked and answered frequently. To learn more about benefits challenges and strategies to combat them, contact Chelten Consulting Group.