A health insurance gap is a period of time during which an individual or family does not have active health insurance coverage. The term is sometimes also used to refer to a discrepancy in the rate of health insurance coverage among different racial or socioeconomic groups.

Explanation

A health insurance gap usually occurs when an individual (or family) switches from one form of health insurance to another, or loses coverage all together. In countries with privatized health care systems like the United States, an individual may be covered by a private health insurance plan, often through his employer. If the individual quits, retires, is laid off, or changes jobs, he may lose the coverage provided by his employer, and experience a gap in coverage.

Waiting Periods

Because many private health insurance plans have a waiting period of up to 90 days to obtain coverage, an individual may experience a gap in coverage even if he immediately obtains new employment or applies for an individual health insurance plan.

Denial of Coverage

Health insurance companies may deny requests for coverage for a variety of reasons, including pre-existing medical conditions, inconsistencies in information provided in the application, and failure to disclose certain symptoms. Denial of coverage by a health insurance company often results in a gap in coverage, as the individual or organization seeks another provider willing to cover the individual. In some cases, no such provider may be available or affordable.

Other Causes

Many jobs do not offer health insurance at all. Employees may go without coverage indefinitely, or choose to purchase an individual health insurance plan. Both can result in a health insurance gap. An individual health insurance plan (not obtained through your employer) can often be prohibitively expensive, even for someone with a comfortable salary. Many individuals earn too much to be covered by Medicaid, yet too little to afford private insurance. Because the individual cannot afford an individual health plan, they may experience a gap in coverage. A person applying for individual coverage may experience complications in the application procedure, or face extended waiting periods while his or her application is processed. Another kind of gap in coverage exists for senior citizens who choose to retire early. In many cases, these individuals have access to Social Security benefits by age 62, but are not eligible for Medicare until age 65. If they choose (or need) to leave their jobs, they may only be able to obtain coverage by paying for an individual plan, or experience a gap in coverage.

Prevention/Solution

There are a few ways to avoid a gap in coverage: In many cases, a person covered under his former employer's plan may be able to extend his coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA). The individual usually pays the employer for its portion of the group coverage, in order to avoid a gap or the higher cost of an individual plan. Persons seeking individual plans can apply as early as possible (usually while they are still covered by an existing plan), so that they are still covered during the waiting period. Keeping track of medical records and providing complete, accurate information during the application process may also reduce waiting periods and help avoid denial of coverage.

Source:

USA TODAY (1/14/2008)

U.S. Department of Labor