Medical gap insurance is a financial need most people under
age 55 have no idea exists unless they take care of or work
closely with the financial matters of an elder relative. In a
nutshell, medical gap insurance provides health care financial
coverage for people with Medicare who need supplemental
assistance. At first, one might think such a situation is a bit of an
oxymoron. Isn't Medicare supposed to cover one's healthcare
needs after they become eligible so they don't need to go out
and buy it any longer or use an employer's plan? Yes and no.
The problem with Medicare is they way that it's financial coverage is designed. The
federal government created what is called colloquially the "Doughnut Hole." This term
refers to the portion of medical expenses in a year that a covered person may have that
Medicare will not cover. The costs are out-of-pocket for the recipient. The federal
government a while back figured out that the majority of people have medical costs that
stay under a certain cost level. By not covering below this level, the program avoids a
number of expenses that the federal government believes can be handled by most
retirees, regardless of income status. In doing so, Medicare then only covers basic co-
pay costs under $1,200 and significant medical costs over $4,550 (figures as of 2010).
Anything in between gets stuck with the personal wallet.
The Doughnut Hole effect is not per medical incident. It works as an aggregate for entire
calendar year. So if cumulative medical expenses that can be documented exceed the
upper level of the Doughnut Hole, then medical expenses after that point are covered,
regardless of whether it's for aspirin or a broken leg. However, even a $5,000 or $8,000
expense hit can be hard for many folks to address, and on fixed income in retirement
such a financial hit can quickly cause unexpected debt or financial
crisis quickly. Much of the crisis usually occurs since medical
costs are usually coupled with a need to provide medical care
immediately in some kind of emergency. The result is a bill that
can't be paid.
Gap insurance helps to solve this crisis problem in the Doughnut
Hole by essentially providing health insurance coverage for costs
that are out-of-pocket. The insurer knows that it will not get hit
with costs over $4,550, so there is a limit to the risk involved,
which is far better than normal health insurance.
Additionally, if enough gap insurance policies are written, then the risk is spread among
many clients who may never need the use of gap insurance in a given year. For the party
the cost of gap insurance is far more palatable as a small monthly premium versus a
sudden medical hit in the thousands of dollars.
Are you in the Doughnut Hole? Gap Insurance may be your best solution.
Medical Gap Insurance