If you’re in hospital, you want financial concerns to be the least of your worries.
Medical aids often don’t pay out in full for certain specialists or procedures. This shortfall is usually manageable for non-urgent treatment because you can plan around the costs of the procedure. However, a sudden illness or an accident can mean that there’s no time to plan or save, and the shortfall – even on a good medical aid – can run into tens or even hundreds of thousands of rands. For this reason, increasing numbers of South Africans are turning to medical gap cover – a kind of “top up” medical insurance that covers your medical aid’s in-hospital shortfall.
We spoke to Ricky Rohrbeck, an independent financial adviser with Select Independent Advisers, to find out how gap cover works, when it works and when it doesn’t.
Every year, your medical aid sets a medical aid rate, which is the base rate that can be charged by every medical professional for every procedure. Most high-end medical aids are then willing to pay up to 300% of this rate. However, many specialists or hospitals charge more than 300% of the medical aid rate. For example, if a surgeon charges 400% of medical aid rates, your medical aid will cover the first 300% and you will have to pay the additional 100%.
Ricky explains that gap cover is a medical insurance product that works in conjunction with your existing medical aid to cover the shortfall between what your medical aid will pay for when you are admitted to hospital, and what the hospital and the specialists charge. So, in the example above, the gap cover would cover the 100% shortfall. Additional benefits, discussed later in this story, will cover other types of medical aid shortfalls as well.
However, Ricky says it’s important to understand that gap cover will never cover something that your medical aid excludes (cosmetic surgery, for instance). It only tops up a shortfall on approved procedures, specialists or medications.
To claim from gap cover, you’ll need the hospital bill, plus your medical aid’s statement of the shortfall with explanatory codes. The gap cover payout will be paid to you, and you will need to make payment to the hospital or medical practitioner.
Premiums are generally affordable, at less than R320 per month per individual or family covered (the premium is the same whether you are a single person or a family).
To get a sense of the costs and benefits of gap cover, we obtained a quote from five different companies, and created the comparative table below.
All the gap cover options featured offer:
- tariff gap cover for up to 500% of medical aid rates
- co-payment cover
- sub-limit cover
- cancer co-payment cover or oncology benefits
These terms are defined and discussed in detail below.
- CompliMed - R320
- Liberty - R281
- Sanlam - R174
- Stratum - R275
- Turnberry - R298
Ricky cautions that when looking at costs, it’s always important to read the fine print and make sure that you are comparing the same or similar cover. Look out for what percentage of medical aid rates the gap cover goes up to, as well as for any exclusions. If you are considering gap cover, you might as well be as extensively covered as possible, so preferably include all the different benefits.
Some gap covers also offer dental benefits for an additional fee, but before you sign on the dotted line, remember that this is likely to only apply for in-hospital dental treatment and not all dental costs.
Here is an explanation of the terminology so you will know what is covered under the different products & policies.
Tariff gap: This is the shortfall between the cost of a procedure that your medical aid will cover, and what the hospital charges you. For instance, your medical aid may cover 300% of medical aid rates, but your specialist may charge 400% of medical aid rates. The 100% shortfall is the tariff gap. In the different gap cover options quoted above, the tariff-gap limit is set at 500% of medical aid rates.
Co-payments: Some procedures or hospitals require you to make a co-payment, which is an additional payment for certain procedures that is not covered by the medical aid.
Sub-limit cover: Medical aids may limit the amount of cover you have for a specific event or procedure by putting a sub-limit in place. This means that if you have a procedure too often, or if it costs more than the sub-limit, you will have to pay in yourself. Sub-limit cover will cover the additional procedures over and above your sub-limit or offer you an additional amount above the sub-limit for these in-hospital expenses.
Cancer co-payments or oncology benefit: Some gap covers offer additional benefits for cancer procedures – even if those procedures take place without a hospital admission. For example, certain experimental cancer medication might not be covered by your medical aid, but will be covered by gap cover. Or you will be required to make a co-payment for certain procedures, which the oncology benefit will cover. This is the least clearly defined benefit, and it’s important to read the fine print carefully to understand what benefits you are getting on the plan of your choice.
All in all, gap cover gives you the peace of mind that, should the worst happen, at least you won’t have to worry about coming up with a big sum of money to cover hospital expenses not paid for in full by your medical aid. As the premiums are not overly expensive and the benefits are extensive when they kick in, it’s a good idea to consider putting your family on a gap cover plan.