Definition of a Coverage Gap in Health Insurance

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A coverage gap leaves you without health insurance.
A coverage gap leaves you without health insurance. (Image: cost of healthcare image by Cindy Haggerty from Fotolia.com)

Many situations can result in the loss of your health insurance coverage, which puts you in a precarious position until you have secured a new policy. Changing jobs, retiring, moving, and just getting older may leave you uninsured. A health insurance coverage gap is the time period between the expiration of one policy and the commencement of another. Understanding exactly what it means to be uninsured, the potential risks you face, and how to fill your coverage gap can eliminate any confusion and help you re-establish protection.

How it Happens

When you are no longer eligible to remain covered by a health insurance plan, because you’ve either changed jobs, moved away, or failed to pay premiums, your policy will officially terminate at midnight on the last day of the billing cycle through which your premium was last paid. Once you are no longer covered by the plan, you are entirely uninsured, creating the coverage gap.

New Medical Bills

Payment for medical treatment of any kind rendered while you are uninsured will be entirely your responsibility. Regardless of the specific services provided, the cost of your treatment becomes your own financial obligation. If you have no health insurance, many physicians and facilities will refuse treatment without payment in advance, except in the case of an emergency.

Reinstatement after Termination

If your health insurance gap exists because you failed to pay premiums, you may be permitted to reinstate coverage by paying the sum total of all premiums that should have been remitted, plus a deposit of one extra month’s ordinary invoice amount. Many carriers will retroactively reinstate your insurance and pay the appropriate portion of any treatment costs incurred during your gap, while others will refuse to contribute but still demand the full past due amount.

Getting New Insurance

The duration of the period during which you have no coverage can negatively affect any new policy you might buy. Each insurance company handles coverage gaps differently, but the majority of carriers have identical regulations regarding uninsured periods. If your coverage gap lasts for 30 days or more, your new policy will by subject to pre-existing condition limitations for six months to one year. Any treatment required or received for issues that already existed will not be covered by your policy.

COBRA

If you’re left without health insurance because you no longer work for the company that provided the plan, you may be eligible to temporarily continue coverage under federal COBRA regulations. COBRA allows you to keep the same benefits you had from your employer for a maximum period of 18 months, provided you pay the entire cost of your policy. With this option, you will only be responsible for the portion of your treatment costs detailed in the health insurance plan, as opposed to the entire balance that exists during a coverage gap.

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