Is medical gap cover really necessary?

Medical scheme membership grants you access to timely and adequate health care. However, if you rely on medical aid to cover all of your medical costs, you could be in for a nasty surprise.  

We consider why shortfalls occur, and whether gap cover can provide a safeguard against unforeseen medical expense liabilities.

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What is a payment shortfall?

A medical bill consists of two parts; the hospital account, and the service provider’s account, notes Andrew Cordy, a financial adviser at Octofin.

“The medical scheme will normally pay the hospital account in full. However, the service provider tariff is often more than what the medical aid covers. This causes a shortfall,” he says.

Joanne Stroebel, director at JST Consulting (Pty) Ltd, elaborates.

“Doctors and specialists are allowed to charge whatever they want, and medical schemes cannot afford these rates. At the same time, medical professionals can’t afford to run their practices on medical aid tariffs.”

Further shortfalls arise when medical schemes impose co-payments for certain procedures, and for the use of non-network hospitals - meaning, hospitals with whom the scheme has no supply agreement. The main purpose of gap cover is to address these, and other short-payments, says Stroebel.

When does gap cover pick up the tab?

Cordy emphasises that it’s important to understand what gap cover is, and what it is not.

“Gap cover will not pay towards a procedure that is excluded from your medical aid. Gap cover is not an additional cover, but serves as a top-up of your existing medical aid,” he explains.

Susan Brits, regional manager for new business at Profmed, says that even common hospital procedures often result in unexpected shortfalls, and these can be claimed from gap cover.

Zestlife gap cover, which Profmed recommends, gives recent payout examples of R62,445 for a tonsillectomy, R77,583 for brain surgery and R115,000 for a heart operation.

Most gap policies also cover a number of out-of-hospital procedures, such as gastroscopies or colonoscopies. Under certain conditions, these types of scopes are included on the prescribed minimum benefits (PMB) list, and are thus a mandatory inclusion on medical aid plans. 

“Major scans, including MRI and CT scans, are often included in gap policies, depending on your medical aid benefits,” Stroebel says.

She adds that most gap cover providers have casualty benefits when procedures and treatments do not require hospital admission.

Other expenses that are covered by some providers include dentistry for accidental tooth fracture, trauma counselling, accidental death payout, and emergency travel and related expenses.

How do you choose the best gap cover option?

Monthly gap cover premiums start from as little as R99, and increase to almost R1,000, depending on the number of members, their age, and the benefits offered. A broker will be able to match your medical aid to the most suitable gap cover option.

The table below compares four gap cover policies, each offering a minimum of 500% cover (five times medical aid tariffs) for a family.

According to Stroebel, the additional cost of high-end gap cover is justified.

“Although the hospital shortfall and co-payment allowances on the basic plans are most often utilised, the additional benefits on the comprehensive plans end up paying out large amounts in the event of claims,” she states. 

“During my own cancer journey, of R450,000 worth of claims over 18 months, my gap cover covered a shortfall of R80,000 for surgeries and hospitalisations. Without this cover, I would have had extreme stress and financial hardship at a time when I needed to focus on healing.”

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