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MEDICAL AID

How gap cover can help you manage your hospital copayments

How gap cover can help you manage your hospital copayments
(Photo: Unsplash / Brett Jordan)

As living costs soar, it might be worth looking at gap cover that will pay for certain shortfalls not covered by your medical aid.

A recent analysis by Sirago Underwriting Managers revealed a 201% increase in cancer gap claims volumes over 2021 and 2022, compared with the previous two years (2019 and 2020).

Sirago’s copayment benefit is applied once the medical scheme cancer benefit sublimit has been reached within the benefit cycle and a copayment is imposed. This gap cover benefit incorporates copayments for ongoing cancer-related treatments and biological drugs until the next full treatment cycle is reinstated by the medical scheme.

Martin Rimmer, chief executive of Sirago, says the trend is concerning. “Many of these cancer diagnoses are likely to be at much later stages of detection and this has a profound impact for patients in terms of the success and cost of their treatment.

“The sharp increase in copayment claims is also firmly rooted in the affordability challenges that South Africans are facing in the current economic climate.

“Many consumers have been forced to buy down on their medical scheme benefits to ‘core plans’, which in turn means access to potentially lower benefits and thus exposure to possibly more self-funding of their healthcare treatment to come from their own pockets,” he notes.

The late diagnoses are directly related to the fact that millions of South Africans did not go for their regular preventative screenings such as pap smears or mammograms during the Covid years.

Sirago reports a sharp uptick in “mega” gap claims related to cancer — these are internally classified as claims of R50,000 and above for shortfalls or copayments not paid by medical schemes.

Michael Emery, marketing executive at Ambledown Financial Services, explains that gap cover insures medical scheme members against discrepancies between what the medical scheme pays and what the medical service provider charges for in-hospital procedures and defined outpatient procedures.

A common misunderstanding is that gap cover will pay for all the healthcare costs not covered by your medical scheme. Not quite. The gap cover only covers the deficit between what the medical scheme pays and what your doctor or service provider charges.

So, for example, if you are on a comprehensive plan and your scheme pays a rate of R650 for GP visits but your GP charges R900, the deficit of R250 would usually be a cash copayment from you or you could claim it from your gap cover policy.

An emerging trend is that the cost-of-­living crisis is forcing many people to reconsider and downgrade their medical scheme membership.

As Tony Singleton, chief executive at Turnberry Management Risk Solutions, points out, gap cover is often seen as a grudge purchase for people who are already paying a premium on their medical aid.

Singleton says when it comes to medical procedures and gap claims, his company usually sees 50% of the expenses being covered by the medical aid and 50% by gap cover.

“This is significant exposure that could force the average family to dip into their savings or retirement fund if they do not have gap cover,” says Singleton.

“The reality is that medical scheme cover can cost 20% or more of monthly disposable household income,” says Rimmer.

“But given the disastrous state of the public healthcare system, having access to quality private healthcare is an expensive but essential safety net that consumers who can afford it understandably do not want to live without.” DM

In a nutshell

Gap cover provides cover for shortfalls up to an annual overall limit (per beneficiary) of R191,000 (as at 1 April 2023), as per legislation. This limit is revised annually, with an effective date of 1 April each year.

For a gap cover benefit to be paid out, the trigger event is primarily an initial payment or intention from your medical scheme to pay its portion of the claim. This is critical. As a simple example, if your medical scheme option does not provide any cover for an MRI procedure, then your gap cover may not provide cover either. It is only where there is a shortfall on a claim or event that your medical scheme does pay towards, primarily for in-hospital procedures, that gap cover will step in.

On some core hospital plans, medical schemes may entirely exclude certain procedures, such as joint replacements and hiatus hernia surgery. This means that if you require a hip replacement, for example, you would have to fund the costs of such surgery, as your medical aid benefit will not cover it, and neither will your gap cover. DM

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