Breeze Logo

10 gaps in health insurance coverage (& how to close them)

Reviewed by
Read time
8 mins

Have you ever picked up your health insurance coverage manual and read it cover to cover?

If you're shrugging sheepishly, you're not the only one. Most people don't make time to read the ins and outs of their health insurance coverage (who has time for that?) but it's important to take note of gaps.

Let's take a look at some of the gaps you might face in your coverage and how to handle them.

Examples of health insurance coverage gaps

Chances are, your health insurance won't pay for the following items. Read through this list carefully, then take note of other things your health insurance doesn't cover by checking with your health insurance provider. You don't want to deal with the unfortunate surprise of realizing your health insurance doesn't cover these items after the fact.

1. Certain prescription drugs

Many insurance and prescription drug plans have a formulary list of covered preferred drugs. Non-formulary prescription drugs are not included on the insurance company's formulary or list of covered medications. You might find an alternative just as effective and safe but less costly.

2. Cosmetic or unnecessary procedures

Insurance companies may not cover certain types of procedures, such as plastic surgeries or weight-loss surgeries. The American Medical Association (AMA) defines cosmetic surgery and reconstructive surgery:

  • Cosmetic surgery: Used to reshape normal body structures to improve a patient’s appearance and self-esteem.
  • Reconstructive surgery: Used to reshape abnormal structures of the body. These abnormal structures may be caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease.

Understand what's covered before you opt for an elective procedure.

3. Out-of-network providers

Insurance plans allow you to choose from a specific network of covered doctors. Out-of-network doctors may not be covered at all. To learn whether a doctor is in-network, use the online provider finder tool to find out whether your doctor is in-network. You can also use a provider tool online to find out whether you should choose that doctor or specialist.

You can also call your doctor's office and ask for your doctor's specific tax ID number. Then, call your insurance carrier and give them the specific name of your plan and your doctor's tax ID number. It can help you determine whether your doctor is in-network.

4. Experimental procedures

Your health insurance plan may not cover experimental procedures or treatments, such as experimental cancer treatments.

Health plans do not have to cover the research costs of a clinical trial, such as extra blood tests or scans; but usually, the trial sponsor will cover these types of costs.

However, health insurance companies may not pay for out-of-network doctors or hospitals if you take part in a clinical trial that's out of network.

5. Lost income

You may not be able to work following treatments or procedures. A health insurance policy will not cover the income lost from missed workdays.

6. Nursing home care

Neither health insurance nor Medicare will cover you when you need nursing home care, home health care, or must move to assisted living long-term.

Note: Medicare might pay for a short stint in rehabilitative services in a nursing home after spending time in the hospital. However, if you must use a facility for long-term help getting around, feeding yourself, and other daily tasks, health insurance won't cover it.

Learn More: Does Medicare Cover Long-Term Care?

7. Cancer treatment costs

Health insurance doesn't cover all costs related to cancer. You could find gaps in coverage through:

  • Provider and clinic visits
  • Lab tests and certain procedures
  • Certain drug costs
  • Hospital stays
  • Rehabilitation expenses
  • Certain surgery costs
  • Home care
  • Out-of-network specialists
  • Transportation costs and lodging

8. Other critical illness treatment costs

Your health insurance may not cover all out-of-pocket expenses when you face a critical illness, including deductibles, copays, coinsurance, travel to appointments, and experimental treatments.

9. Long-term disability-related costs

Regular health insurance doesn’t cover your inability to work if you cannot work due to an accident, injury, or illness because of one major reason: Most health insurance is tied to a job.

Some employers do offer continued health insurance coverage while you're on short- or long-term disability leave. However, it's important to know that short- and long-term disability benefits don't cover the cost of health insurance premiums. Rather, short-term disability and long-term disability pay a portion of your income while you can't work — not your health insurance.

10. Accidents

Most health insurance plans and policies will cover car accident injury bills but your health insurer might play second fiddle to auto policies, which usually pay out first.

Health insurance typically has final responsibility for treatment once you cycle through all other forms of payment. However, if you experience a car accident, you'll usually still have to pay your deductible amount under your health insurance policy, as well as required copays, and other charges not typically covered by the policy.

How to fill the gaps in your health insurance coverage

Take a look at these potential solutions because your health insurance may not cover it all.

Emergency fund

You may want to use an emergency fund to cover some of the gaps in your health insurance coverage. Many experts believe you should have enough money in your emergency fund to cover at least three to six months' worth of living expenses. If you don't already have an emergency fund, how do you do this?

Start by estimating your costs for critical expenses, like food, utilities, car loans, mortgage payment, and more. Don't include the things you might eliminate if you were to lose your job.

You may determine that three to six months' worth of expenses might not be enough, however. For example, if you find yourself in a recession (when unemployment is higher, and you're in an industry where layoffs happen more, such as construction), if you don't have a steady income (such as when you're a full-time freelancer).

Just make sure you use your emergency fund for a true emergency. For example, plastic surgery might not really qualify as a true emergency (compared to needing groceries when you lose your job, anyway).

Disability insurance

Over one in four of today's 20-year-olds will become sidelined by a disability before reaching age 67, according to the Social Security Administration. That's just one of the reasons why owning a personal disability income insurance plan is key to filling the gaps in your health insurance coverage.

Long-term disability coverage can cover you if you encounter an accident, illness, or injury that impedes your ability to work. You might be tempted to get long-term disability insurance through your company, but don't stop there.

On the other hand, a short-term disability policy covers you in the event of a temporary injury or illness — typically three to six months, while long-term disability policies cover longer terms including five to 10 years. The government also offers Social Security Disability Insurance (SSDI), but you must meet the requirements to qualify.

Get a personalized disability quote in seconds.

Accident insurance

Accident insurance, also known as supplemental accident insurance or personal accident insurance, pays benefits for accidental injuries. An accident insurance policy can help with extra costs for an ambulance, going to the emergency room, physical therapy or urgent care due to burns, concussions, dislocations, fractures, lacerations, and more.

Learn More: Is Accident Insurance Worth It?

Critical illness insurance

Critical illness insurance, a type of supplemental insurance, pays out a one-time lump sum cash benefit in certain situations. If you suffer from cancer, heart attack, or stroke, you can use critical illness insurance to cover extra costs related to treatment and specific procedures. It can also help with recovery costs (such as an inability to work) following your recovery from serious conditions.

Cancer insurance

A supplemental cancer insurance policy may help cover extra expenses not covered by your regular health insurance plan. You may want to consider getting it if cancer runs in your family, so you know you can cover all cancer treatments (even those out of network).

Learn More: How Does Cancer Insurance Work?

Get additional coverage to close gaps

Give your health insurance policy a deep dive so you know what to expect if the unexpected happens. You don't want to put yourself or your family in a compromising situation, particularly when you can tap into ways to get coverage for certain situations.

Once you identify the gaps in your health insurance coverage, take action to close them and protect yourself from the financial impact of a health emergency.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published July 6, 2021
Related Articles

Get started online — anytime, anywhere.

(Seriously, it's a breeze.)