Should you sell gap plans?

Should you sell gap plans?

Should you sell gap plans? The rising price of health insurance is driving the latest (and arguably strangest) trend: an insurance policy for health insurance.

Gap plans, used to cover out-of-pocket expenses, are increasingly becoming popular with health insurance customers and businesses looking into group plans. The policies can be used to cover even the heftiest deductibles.

So popular are these policies that some health insurers are encouraging their clients to secure gap plans to go with their health plans.

"People see the prices of individual insurance and they say, 'Boy, a $6,000 deductible seems really high. I don't want something that gives me that much risk,' “ Missouri Association of Health Underwriters president and insurance broker Ryan Hillenbrand told NPR. "That's why [the gap insurance] market is heating up a little bit more."

Many health insurance plans are seeing premium rate hikes, pushing customers to choose cheaper options with higher deductibles. According to data from the Kaiser Family Foundation, over 90% purchasing insurance under the Affordable Care Act (ACA) chose plans with an average deductible of $3,000 or more in 2016.

One of the most popular plans under the ACA could experience premium increases by 10% on average across the country next year, reported NPR. Those who do not qualify for subsidies will be feeling the weight of such changes, Hillenbrand said, but gap plans could give them a way to settle for more flexible options.

While most customers (roughly 8 out of 10, according to NPR) will have subsidies to help them pay for the premium increases, businesses will not have the same luxury for their group health plan expenses.

"The cost of health insurance is going up and businesses have been forced to deal with that by raising their deductibles or increasing out-of-pocket costs for their employees," commented insurance broker Alex Forrest in South Carolina. "That stinks."

Forrest pointed out that with gap plans, companies can offer health benefits that keep out-of-pocket expenses for employees down while saving businesses from having to pay for pricier plans with lower deductibles.

The gap plan trend does not have everyone convinced, however. Mathematica Policy Research health economist Deborah Chollet argued that the ACA’s insurance reforms were created "basically to drive these kinds of creative insurance arrangements out of the market."

Chollet added that since gap plans are not major medical insurance, they are not regulated by the ACA and can avoid complying with consumer protections.

"[The companies that offer gap plans] can ask you about your health status, they can deny you coverage, they can do all of the kinds of things that the Affordable Care Act prohibits," Chollet explained.

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