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What gap cover will and won’t pay for

Apr 20 2017 14:19
Susan Erasmus

Cape Town - Many people who have a basic hospital plan and gap cover on top of that think they are completely covered. Not so fast.

Gap cover is designed to pay the ‘gap’ or shortfall between what your medical scheme pays, and what a private doctor charges.

If your medical scheme tariff or a specialist visit is R600 (in-hospital) and the bill is R1 100, the gap cover is supposed to foot the total bill for the difference of R500 – or so people think.

READ: Gap cover and hospital cash plans here to stay

Although gap cover is generally not expensive (and you can only take it out if you/your family already are a member of a medical scheme), it might be an idea to go and read the fine print.

Warning: you might not like what you find there, as gap cover insurers have found themselves in the firing line of spiralling private healthcare costs and have had to rein in their expenditure to remain financially viable. Unlike medical schemes, insurance companies are run for profit.

Gap cover usually requires only one policy for a single member/any dependants, so it is still a very good deal if you have several dependants. In essence you actually just pay once, and you are all covered, provided you and your dependants are all on the same scheme and on the same option.

It must be remembered that gap cover is an insurance product, and does not resort under the regulations of the Medical Schemes Act of 1998, but under the regulations of the Short-term and Long-term Insurance Acts.

Read more about new demarcation regulations about where medical scheme cover ends and insurance cover begins: New laws on gap cover and hospital cash plans

So how are gap cover payments calculated?

Gap cover used to pay the difference between what your scheme paid, and what the bill was for private doctors and specialists in-hospital. In practical terms, this meant that even if you had the cheapest hospital plan which only paid a fraction of the costs, you would be covered in full.

In a circular sent out to its members at the end of 2016, Guardrisk mentions that during the last three years, the responsibility of payment of the largest share of medical practitioners’ costs has shifted from the medical schemes to the gap cover providers. In certain cases, the gap provider has carried up to 80% of the costs, leading to a severe increase in the cost of medical practitioner shortfall claims each year.

Automatic full payment of any shortfalls is not sustainable in the long run, according to the Guardrisk circular, and many gap cover products have introduced a new way of calculating how much of the co-payment they will cover. What many of them have switched to is a payout system based on what your medical scheme pays.

Some will pay up to twice what your medical scheme has paid, and others up to five times in a kind of match-pay system, depending on the kind of policy you have.

In practice, what it amounts to is the following: if your bill from a private practitioner is R25 000, of which your medical scheme has covered R7 000, your gap cover (if it pays twice the medical scheme contribution), will pay R7 000 x 2, which is R14 000. So your bill would work out as follows

Doctor’s bill:                                          R25 000                 

Minus medical scheme contribution:             R7 000 

Minus gap cover contribution                    R14 000

The shortfall (for your own account)           R4 000

If your scheme paid R10 000 of the above bill, your gap cover would pay twice that (namely R20 000), but as the total bill or maximum amount is only R25 000, that would be more than the total. The difference is not paid out to you, but the whole amount of the bill of R25 000 would be covered between your medical scheme and your gap cover policy. It is to your advantage then to have a medical scheme that pays out more than 100% of the medical scheme tariff.

It must be remembered that the purpose of gap cover is to pay the shortfall of private doctors’ in-hospital bills. There are many things that most gap cover policies will not pay for. You need to look at the small print in your policy documents.

Things most gap cover policies won’t pay for

  • Ward costs in a hospital or step-down facility;
  • Upgrades to a private room;
  • Pre-admission consultation costs;
  • Medication (both in-hospital and take-home);
  • External prostheses (an artificial breast or a prosthetic leg);
  • External appliances, such as wheelchairs or crutches;
  • Routine medical examinations, such as ultrasounds;
  • Home or private nursing;
  • Extra costs related to weight/BMI-related procedures;
  • Mental health disorders, transportation costs (such as in an ambulance);
  • Out-of-hospital dental treatments;
  • Cosmetic procedures;
  • Costs incurred for treatment by a non-designated service provider (determined by your medical scheme); and
  • Co-payments for any procedure for which you are in a waiting period.

Some pleasant surprises in what gap cover might pay for

Again, this depends solely on your insurance provider and the policy you have chosen (there is usually a choice between two: the no-frills version and the more comprehensive one). It can do no harm to check and even if the amount is not huge, every little bit helps. You might find that your gap cover could pay for some of the following:

  • Some out-of-hospital procedures that used to be require hospitalisation, but can now be performed in a doctor’s surgery. Contact your insurer for details on these.
  • Co-payments for certain specified hospital procedures (in full). Call your insurer for details.
  • A contribution to cancer treatment costs once your cancer benefit on your medical scheme has run out.
  • The shortfall on internal prostheses (such as a hip replacement procedure) up to a stipulated maximum.
  • A lump sum for first-time cancer diagnosis (terms and conditions usually apply).
  • Lump sum benefit for accidental death or permanent total disability.
  • Lump sum for long-term hospitalisation over a certain period of time.
  • Tooth repairs in the case of accidental injury (such as breaking a tooth in a car accident).
  • Some casualty costs (once again, terms and conditions apply).

(Sources: Guardrisk, Sanlam, Council for Medical Schemes)

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medical schemes  |  health  |  money

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