If you have medical aid in South Africa, you’ve probably heard the term “Gap Cover” thrown around. Perhaps you’ve dismissed it as an unnecessary extra, or maybe you’re just plain confused about what it actually is and why you might need it.
Let me be clear: Gap Cover is not a “nice-to-have” add-on; it is an absolutely critical companion to your medical aid.
In my decades as a medical aid broker, I’ve seen countless individuals and families blindsided by enormous medical bills they thought their medical aid would cover. The culprit? The “gap.”
Understanding Gap Cover is crucial for anyone with medical aid, especially for businesses looking to provide truly comprehensive protection for their employees.
Let’s break it down.
Understanding the “Gap”
To understand Gap Cover, you first need to understand the fundamental problem it solves: the difference between what your medical aid pays and what private healthcare providers charge.
- Medical Aid Rate: Your medical aid scheme has a specified rate at which it pays for medical services. This is often referred to as the “scheme rate,” “medical aid tariff,” or “NHRPL” (National Health Reference Price List) based on various factors and negotiations. Most standard medical aid plans will pay 100%, 200%, or sometimes 300% of this specific rate.
- Private Provider Rate: Specialists (surgeons, anaesthetists, radiologists, pathologists) and private hospitals are legally entitled to charge whatever they deem appropriate for their services. They often charge significantly morethan your medical aid’s reimbursement rate – commonly 300%, 400%, or even 500% of the scheme rate.
The “Gap” is the shortfall. It’s the difference between what the private provider charges and what your medical aid pays. This shortfall is your responsibility to pay out of your own pocket.
How Gap Cover Works
Gap Cover is a short-term insurance product (regulated by the Financial Sector Conduct Authority, FSCA, under the Insurance Act), not a medical aid scheme. It works in conjunction with your medical aid.
Here’s the simple breakdown:
- You have Medical Aid: This is your primary cover for major medical expenses, including hospitalisation.
- You have Gap Cover: This is your secondary layer of protection, specifically designed to cover the “gap.”
- Medical Event: You go into a private hospital for a procedure.
- Medical Aid Pays First: Your medical aid pays the portion it covers (e.g., 100%, 200%, or 300% of its rate).
- Gap Cover Pays the Rest: Gap Cover then pays the difference between what the provider charged and what your medical aid paid, usually up to an additional 500% (or sometimes even 600%) of the medical aid rate.
Example:
- Specialist Bill: R15,000
- Medical Aid Rate (100%): R3,000
- Medical Aid Payout (200% plan): R6,000 (i.e., 2 x R3,000)
- The “Gap” You Owe: R15,000 – R6,000 = R9,000
- Gap Cover Payout: Your Gap Cover would pay this R9,000 (provided it’s within its stated maximum percentage,e.g., up to 500% of the scheme rate).
Without Gap Cover, that R9,000 would come directly out of your bank account.
What Does Gap Cover Typically Include?
While specific benefits vary between providers, most comprehensive Gap Cover policies will include:
- In-hospital Specialist Shortfalls: This is the core benefit – covering the difference between what specialists charge and what your medical aid pays for procedures and consultations in hospital.
- Co-payments and Deductibles: Many medical aid plans have upfront payments or deductibles for certain procedures (e.g., R10,000 for a back surgery, or R5,000 for a gastroscopy). Gap Cover can often pay these.
- Sub-limits: Some medical aids have limits on specific benefits (e.g., R50,000 for internal prostheses). Gap Cover can provide additional funds if these limits are exceeded.
- Oncology Shortfalls: Cancer treatment is incredibly expensive. Gap Cover often provides additional cover for oncology treatment where medical aid limits are reached or when co-payments apply.
- Emergency Room Treatment (Casualty): If you visit a casualty ward for an accident or emergency and are notadmitted to hospital, your medical aid might not cover it. Gap Cover often provides a benefit for this.
- Day-to-Day Benefits (Limited): Some higher-end Gap Cover plans may offer limited benefits for certain out-of-hospital specialist visits or prescribed minimum benefits (PMB) shortfalls.
Why is Gap Cover So Important for South Africans?
- Astronomical Private Healthcare Costs: As mentioned, medical care in private facilities is incredibly expensive.
- Specialist Charges are Uncapped: There’s no law preventing specialists from charging above medical aid rates.
- Even Good Medical Aids Have Gaps: Even the most comprehensive medical aid plans will have potential shortfalls on specialist fees.
- Financial Ruin Prevention: A single unforeseen hospital stay could lead to tens or hundreds of thousands of rands in out-of-pocket expenses, leading to debt, stress, and impaired financial stability.
- Peace of Mind: For a relatively small monthly premium (often just a few hundred rand), you gain immense peace of mind, knowing you won’t face devastating bills.
Gap Cover for Corporates: A Smart Employee Benefit
For businesses, offering Gap Cover as part of your employee benefits package is one of the smartest decisions you can make.
- Completes Your Medical Aid Offering: It transforms a good medical aid plan into a truly comprehensive one,protecting your employees where the medical aid leaves off.
- Highly Valued by Employees: Employees quickly learn the value of Gap Cover when they understand the risk it mitigates.
- Cost-Effective: Group Gap Cover policies are usually very affordable per employee, especially when compared to the cost of a higher-tier medical aid plan.
- Tax-Deductible: Just like medical aid, employer contributions to Gap Cover are generally 100% tax-deductible for the company.
Don’t Leave Yourself Exposed!
If you have medical aid but no Gap Cover, you are taking a significant financial risk. Think of your medical aid as the foundation of your healthcare safety net, and Gap Cover as the essential roof that protects you from the storm of unexpected bills.
Don’t wait until you’re recovering from surgery, staring at an eye-watering specialist bill, to realise you needed it.
As your dedicated broker, I specialise in creating comprehensive, affordable employee benefits packages. Let’s ensure your company’s medical aid offering is truly complete with the essential protection of Gap Cover.
Contact me, Debbie Pretorius, today. Let’s discuss a solution that protects your team and your bottom line.