Would you Like Some Insurance With Your Insurance?

For the first time in her life, 26-year-old freelance designer Susannah Lohr had to shop for health insurance this year.

She called up a major insurer in the St. Louis area where she lives, and it offered her a plan with a hefty $6,000 deductible — that’s the amount she would have to cover herself before the insurance kicks in.

When she balked, the salesman on the phone suggested that she could buy a “gap plan,” a separate policy for $50 a month to cover her deductible.

“After I got off the phone with him, I realized: That’s actually just insurance for my insurance,” she said, laughing.

Gap plans, used to cover out-of-pocket expenses like high deductibles, are becoming increasingly popular among consumers and businesses.

The rising price of insurance is driving the trend, explained insurance broker Ryan Hillenbrand, president of the Missouri Association of Health Underwriters.

“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,’ ” Hillenbrand said. “That’s why [the gap insurance] market is heating up a little bit more.”

Gap insurance is in a category of insurance known as “limited benefit.” No matter how bad a person’s situation, the plan will pay out only a certain amount of money. “Mini-med” policies, now illegal under the Affordable Care Act, are another example of a limited benefit plan

Now, there’s renewed interest in gap plans. With monthly premiums on health insurance going up, more people are choosing cheaper, high-deductible options. In 2016, more than 90 percent of people buying insurance under the ACA chose plans with an average deductible of $3,000 or higher.

Next year, the cost of one of the most popular plans available under the Affordable Care Act could increase by 10 percent on average across the country. That comes on top of a 5 percent jump the year before.

When consumers see those prices, Hillenbrand said, “they get sticker shock.”

“If you don’t qualify for a subsidy, you’re bearing the brunt of all that cost,” Hillenbrand said. “And here come the gap plans.”

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