When is it too late to take out gap cover?

You’ve been responsible and made sure you’re up to date with your medical aid or hospital plan, but when the time comes to claim for surgery, you find there are still co-payments.

To avoid these kinds of costs, you could take out gap cover. But what if you already know you need to go in for surgery? But when is it too late to take that option? JustMoney found out from local specialists.

Tip: If you don’t have medical aid or a hospital plan, click on the one that sounds like your fit.

The role of underwriting in claims

According to Deon Kotzé, head of research and development at Discovery Health, when you apply for gap cover, the application process includes underwriting.

“The information from the underwriting process is used by the insurer to determine any waiting periods that may apply to the benefits of the gap cover policy. This is standard practice across the insurance industry,” says Kotzé.

He explains that the underwriting protects the insurer against “anti-selection” – in other words, where an individual takes out cover knowing that they will claim immediately from the policy.

READ MORE: What’s the deal with underwriting?

“Without this protection, the cost of gap cover will be significantly greater, since individuals would only purchase gap cover when they know they need it,” says Kotzé.

He adds that you are entitled to take out gap cover before the surgery. But you will have to disclose that you need surgery when applying for gap cover, and the insurer may impose a waiting period on the cover for the surgery.

“If you do not disclose this information, the insurer may cancel your cover once it becomes known that you withheld the information on application. This is referred to as non-disclosure in the insurance industry, and again protects the insurer against anti-selection,” says Kotzé.

Which waiting periods apply?

According to Tony Singleton, CEO at Turnberry Management Risk Solutions, it’s typical to face a three-month waiting period in the gap cover market. In addition, there are usually condition-specific or pre-existing conditions, which could last for up to 12 months.

He points out that childbirth is an example of this, which usually has a 10- or 12-month waiting period before a claim would be entertained.

“These safeguards from a risk point of view would prevent a claim in the first year being made against the insurer and, although cover can be taken out, a claim would not be paid in the case of anti-selection or non-disclosure within the first 12 months,” says Singleton.

“It’s interesting to note that, following the recent demarcation ruling, gap cover insurers are only able to exclude conditions for a maximum of 12 months. Thereafter, the policyholder would be covered in terms of the policy terms and conditions,” he adds.

According to Kotzé, if a member can show that they have had gap cover with another insurance company for at least six months, with less than 90 days’ break in cover between the time they ended their policy with them and activated their new policy, the three-month general, 12-month automatic, and 12-month pre-existing-condition waiting periods may not apply.

Who can access your medical records?

Singleton says that in order to protect the overall risk pool, an insurer can investigate claims.

“The permission to access your records is usually included in the gap cover application form, claim form, and the terms and conditions of the policy,” says Singleton.

Kotzé explains that insurers may also request medical information from the policyholder to confirm the validity of the information disclosed in the underwriting process, or the information supporting a claim.

“Medical records may be requested as part of this validation, but can only be accessed with consent of the policyholder,” says Kotzé.

Find out more about medical aid or a hospital plan by clicking on the links to the left.