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Gap cover: Top-up health insurance that can protect you financially

Unpacking the mechanisms of gap cover and what to look for when choosing a benefit.

If you’ve ever been hospitalised, you’ll probably know what it feels like to be faced with exorbitant medical costs – some of which may not be covered by your medical aid. The difference between what your medical specialist charges and what your medical aid covers – known as the ‘gap’ – can be unaffordable to the average person, which is where gap cover can play an important role in your overall portfolio.

While medical aids are regulated by the Medical Schemes Act, gap cover is short-term insurance which, together with your medical aid, provides top-up health cover up to certain limits. By design, its role is to provide additional financial protection to medical scheme members who receive in-hospital treatment and care so that they are not saddled with large out-of-pocket expenses following a hospital event. With a vast array of gap cover options available, it may be difficult to decide what form of cover to put in place, and this article is designed to unpack the mechanisms of gap cover and what to look for when choosing a benefit.

Joining and membership

Your age will be a determining factor when selecting gap cover because it will have a direct impact on your premiums and eligibility. Some gap cover providers have a cut-off age of 60 or 65 when it comes to new members, while others providers have no age limit. Many providers structure their premiums according to the age of the member, using age brackets of 55 and younger, 56 to 64 years, and 65 years plus – with the oldest age group paying considerably higher premiums as a result of the greater risk they pose.

Some gap cover policies are restricted to members of certain medical schemes only, while others are open to members of any medical scheme, with the provision being that it must be a duly registered medical aid in South Africa. To check that your medical aid is registered, you can visit the Council for Medical Schemes website. In addition, gap cover policies range from entry-level, nominally-priced cover to comprehensive options with a vast array of additional benefits and, as such, the premiums will depend largely on your age and the type of benefits you choose.

Medical scheme tariffs and gap cover

If you check your medical aid plan option, you will note that in-hospital procedures are quoted as covering up to 100%, 200% or 300% of the medical scheme tariff, and it is important to understand what this means for you as a member. Firstly, medical expenses such as a doctor, specialist and hospital costs are not regulated, and service providers are entitled to charge fairly for their services. However, the Department of Health has issued a price guideline (known as the Reference Price List (RPL)) which is used by medical aids as a guideline when setting their rates.

These medical scheme rates differ from scheme to scheme but, in general, the more basic plan options cover in-hospital costs at 100% of the medical scheme rate whereas the top-end plans pay up to 300% of the medical scheme tariff, up to a maximum of R173 000 per person per year. However, because doctors and specialists are not bound by these guidelines, they can (and do) charge up to five times more than the scheme rate – which is where gap cover becomes useful.

Benefits provided by gap cover policies

In its simplest form, gap cover is designed to cover the difference between what your medical specialist charges for in-hospital treatment and your medical aid tariff, up to a certain limit, with top-end gap cover providers offering up to 600% of the medical tariff. However, gap cover benefits have evolved over time and can now include a range of enhanced benefits. For instance, some gap cover policies cover the costs of upfront hospital co-payments, outpatient kidney dialysis, and procedures performed in day clinics. Many gap cover providers offer once-off lump-sum benefits if diagnosed with cancer or a heart condition, if the member accesses casualty or trauma, or in respect of internal prostheses such as a knee replacement.

Other useful benefits to look out for include lump sum cover for accidental injury or death, accidental dentistry cover, and cover for medical treatment received when travelling internationally. Scopes and scans, which are normally performed on an out-patient basis, can be high-cost items and, as such, many gap cover policies provide benefits for these, so it is important to determine whether your policy offers such benefits, specifically MRI and CT scans which can be very expensive.

Waiting periods and exclusions

As in the case of medical aid, gap cover policies come with certain exclusions and waiting periods, and it is important to familiarise yourself with these before signing up. Most gap cover providers apply a general waiting period of three months before a member can claim benefits, plus a 12-month waiting period of pre-existing conditions, which includes pregnancy. Therefore, if you are contemplating falling pregnant it is always a good idea to take out a gap cover policy in advance to ensure that your pregnancy and subsequent child-birth are not excluded from benefits.

Exclusions refer to certain procedures and treatments which will not be covered by your gap cover, such as elective cosmetic surgery, specialised dentistry, external prostheses, obesity and bariatric surgery, sleeping disorders, stem cell harvesting or treatment, or attempted suicide. Your gap cover provider should provide you with a detailed list of these exclusions in advance so that you are aware of what treatments and procedures you cannot claim for.

Choosing a gap cover benefit

As a top-up healthcare benefit, your gap cover should not be viewed in isolation but rather as part of your overall medical risk portfolio. Your medical aid, disability and dread disease cover all play a role in protecting you financially against unforeseeable healthcare costs, so it’s important to consider all benefits and policies before making your decision. The first step should be to determine exactly what in-hospital benefits are offered by your medical aid and then look for a gap cover policy that compliments this cover by addressing those shortfalls.

Keep in mind, however, that your gap cover is not designed to cover treatment for Prescribed Minimum Benefits as these costs must by law be covered by your medical aid. Having said that, your medical aid can insist that you use a Designated Service Provider (DSP) when receiving treatment for a PMB, so it is important to read your scheme rules. If you choose to be treated in a non-DSP, your scheme may penalise you in the form of a co-payment.

Claiming from your gap cover policy

Where your gap cover provider is separate from your medical scheme, you will need to claim directly from your provider by submitting your hospital account with ICD-10 codes together with your medical aid statements reflecting the shortfall. Once processed, your gap cover provider will reimburse you directly, whereafter it is your responsibility to settle with your doctor or specialist. Where your medical aid and gap cover are linked, you may be able to submit one account which will then be processed by the medical aid and gap cover respectively.

To avoid any nasty surprises, if you do need to have a procedure or operation performed in the hospital, the first prize is to obtain a detailed quote from your specialist in advance. Using this quote, your healthcare advisor should be able to show you exactly what will be covered by your medical aid, what will be reimbursed by your gap cover, and what costs (if any) will be for your own account.

Because of the varying number and types of gap cover policies available, it is often difficult to do a comparative benefit and premium analysis and it may be worth your while seeking advice from an independent healthcare advisor before making a selection. There are also some very useful gap cover comparison tools online which you can use when doing your research.

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LOL — I did not need this product after a heart operation, back fusion and knee replacement so what is the use of it ???

I found the best plan for my family is one that excludes the ATB. This plan fully covers the local private hospital bill. It does not fully cover the cost of healthcare professional services while in hospital. In worst case there could be three or four such providers. Gap cover paid the difference so that 100% of hospital treatment was covered. There should also be some cover for out of hospital scans, i.e. day clinic services.

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