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What is a GAP health insurance plan?

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The lowdown...
  • An insurance gap is the time in which a person lacks regular or long-term health insurance coverage
  • Gap health insurance is short-term coverage that can bridge over a period between regular insurance coverage
  • Gap insurance can cover periods without qualified health insurance
  • Gap insurance does not satisfy the individual Mandate and does not avoid the tax penalty

The insurance industry offers products to fit situations when consumers need a coverage solution to avoid a gap in coverage. The industry offers plans called short-term or temporary insurance; it is insurance that consumers can customize to fill a gap before getting longer-term coverage.

The Affordable Care Act set standards for qualified coverage, and short-term policies do not meet those standards. They do provide some level of protection for a short interval.

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Coverage Gap Exemption

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The Marketplace rules permit a gap within the one-year insurance cycle of fewer than three months. The Marketplace refers to the allowed three month period as the gap exemption. The rules will not penalize the gap for an applicant that later registers during open enrollment or a special enrollment.

Gap Health Insurance

The insurance industry offers a solution for persons in transition between insured situations. They offer short-term health insurance that consumers can activate and cancel quickly.

This type of insurance is not comprehensive protection such as that found in Marketplace policies. It does not meet the legal requirements of the Affordable Care Act for coverage, value, and limits. Short-term coverage does offer a level of protection.

– Older Applicants

Applicants at, near, or over age 65 can use short term coverage to bridge the gap until Medicare benefits begin. This is a convenient use of short-term insurance when it might make little sense to signup for a Marketplace policy with $7,500 deductibles.

  • Medigap insurance is a different type of gap solution. It covers the excess charges in Medicare Part B-Medical Insurance. Typical Medicare coverage in outpatient care leaves unpaid bills in the patients account that can add up to substantial sums. Medigap is a financial gap solution.
  • Medigap or Medicare Supplement pays the approximately 20 percent consumer share for participants in Original Medicare.

– Qualified Marketplace Applicants

Qualified Marketplace applicants are those that can afford to pay premiums. After open enrollment, and without a qualifying life event, short-term coverage provides insurance protection.

  • Covers the short term gap until the next open enrollment period.
  • Offers quick startup with little or no waiting period.
  • Policyholders can terminate short-term policies once they no longer need them.

– Employer Coverage

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Employer coverage does not obey the open enrollment rules of Obamacare. Employer-sponsored coverage is major medical coverage that can begin at any time of the year permitted by the plan. The employer must make coverage available within 90 days of starting work.

  • Applicants waiting for employer coverage can use short-term plans to cover the gap.
  • Applicants seeking to cover a job search period can use short-term plan until they find employer coverage or qualify for Medicaid.

The Individual Mandate

The Affordable Care Act requires every eligible resident to get and keep qualified health insurance. The individual mandate is the heart of the effort to get everyone covered. Inclusion is vital to the goals of improving health, reducing health costs, and extending lifespans.

Guaranteed Issue Policies

The Obamacare Marketplace and state exchanges offer guaranteed-issue policies for all qualified applicants during the open enrollment period.

Obamacare is not open to all applicants, and guaranteed-issue only applies to those with the ability to pay premiums.

The law provided Medicaid Expansion to cover persons with too little income for Obamacare policies and too much income for Medicaid coverage.

After Open Enrollment

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The open enrollment period is the best time to buy qualified health insurance. Those that do not enroll must pay a tax penalty and wait until the next open enrollment.

The exception to the rule against signups after open enrollment is the special enrollment period.

Individuals who experience changes in their status known as qualifying events can apply for a new chance to buy insurance. The changes must be such that require a new opportunity to get insured. The Obamacare rules provide exceptions for qualifying life events.

The Life Events

The federal Marketplace and state exchanges recognize that life occurrences regularly happen among a broad and diverse population. Some of these changes in status require a new opportunity to purchase heath insurance and comply with the individual mandate. The accepted changes in status include the Life Events listed below.

  • Marriage
  • Divorce
  • Childbirth and Adoption
  • Loss of coverage as a dependent
  • Loss of coverage as an employee

Special Enrollment Periods

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The exchanges and the Marketplace can grant special enrollment periods. These signup opportunities run for sixty days, and applicants can buy insurance that meets the requirements of the individual mandate. The below-listed items describe some advantages of the special enrollment periods.

  • Insurance coverage usually can start within 30 days.
  •  Qualified applicants have guaranteed-issue.
  • Applicants can get tax credits and financial assistance through state exchanges and the Marketplace.

Differences Between Short-Term and Obamacare Policies

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Obamacare reformed the insurance industry, and one of the targets was the practice of short-term insurance. These policies filled the marketplace with coverage that typically failed to meet the expectations of consumers. The coverage gaps left many insured people exposed to massive amounts of medical debt.

The following items describe some important differences between Marketplace policies and short-term insurance.

  • Obamacare policies are guaranteed-issue and applicants get community ratings. Short-term insurance is not guaranteed issue unless required by state law in the state of application.
  • Short-term plans use medical questions and follow-up to determine risk before issuing coverage. Short-term insurers can limit coverage and exclude protections they regard as high risk.
  • ACA compliance requires coverage of the ten essential health benefits. Short-term policies do not have to meet the requirements of the Affordable Care Act for qualified health insurance. Typically, short-term policies cover few of the essential health benefits.

Short-Term Networks

The short duration and limited coverage in gap health plans do not reduce the need for a robust network of professional medical care providers.

Many short-term insurance providers describe wide networks of well-known hospitals and established medical practices.

The identities of the providers inform the situation best, the large US insurers that offer short-term coverage have access to vast inventories of medical services providers.

Short-Term Solutions

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Short term insurance can help consumers manage temporary situations by providing customized health insurance coverage. Comparison shopping is an excellent method for selecting short-term insurance.

Consumers must study the plans carefully as they do not provide the standard, required items like Obamacare policies.

Short-term plan options include low premiums and a variety of coverage packages. Comparison shopping can help consumers the best combination of deductibles, benefits, and terms of coverage.

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