Gap cover is a health insurance policy that is available only to medical scheme members, and provides cover for certain gaps in the benefits offered by a scheme.
A key gap in the cover that these policies seek to plug is the difference between what a doctor charges to treat you in hospital and the rate at which your medical scheme reimburses you for these claims.
Gap cover policies also provide cover that tops up your scheme’s benefits, such as those for oncology or casualty room treatment.
Medical schemes are obliged to cover all medical emergencies, but if, for example, an x-ray or scan, after a fall or accident, proves you have no injuries, your scheme may not cover the costs of the diagnosis.
Gap cover can also provide for the co-payments your scheme imposes for certain procedures or admissions.
What gap cover insures you for
Tariff differences
A gap cover policy can pay out when a doctor who treats you – either in hospital or for an equally expensive procedure in their rooms - charges more than the rate at which your scheme pays for the service provided.
Since 2006 there have been no guideline rates or tariffs for medical services including hospitalisation and procedures.
As a result, rates charged by providers and those reimbursed by schemes, have diverged.
Each medical scheme sets its own rates at which it will reimburse providers and states these in their rules and benefit schedules.
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GAPS YOUR POLICY MAY COVER Oncology treatment: Cancer treatment costs vary substantially and depend on how severe the diagnosis is and whether biological or new generation drugs are used or not. Typically, however, claims on policies are for costs not covered by a scheme, ranging from ±R30 000 to R150 000 annually. And you may, depending on your recovery, face these costs for more than one year. Source: Cinagi 2021 |
Different scheme options pay at different multiples of these rates, with cheaper options paying at 100% of the scheme rate, higher ones paying 200% and some top options paying 300% to certain providers only.
Providers independently increase their rates annually in line with the costs they face.
Specialist doctors can charge any rate and it may be up to seven times more than the scheme rate.
Unless you use providers from a list of those whose tariffs your scheme states it will cover in full, you may face a shortfall in medical scheme cover when you are treated in hospital.
You should also be covered, regardless of what the provider charges, if you are treated for a condition covered by the prescribed minimum benefits (PMBs) and you use the provider your scheme stipulated you should use.
You also enjoy full cover for PMBs when it is an emergency.
Some schemes pay providers directly if they charge within scheme rates. They may also list these doctors as ones you should use when you need treatment for a condition covered by the prescribed minimum benefits.
While gap cover policies offer to plug the gap in your medical scheme cover, just how much of the gap is covered depends on the benefit offered.
Questions to ask
Ask your gap cover provider or broker:
For example, if the scheme pays 100% of its rate and your gap cover pays an additional 200% of the scheme rate, you will be covered up to 300% of the scheme rate.
If your specialist charges 400% of your scheme rate, you may still face a shortfall in cover.
Some policies cover you for twice your medical scheme benefit. So if the scheme pays 200%, the provider will pay 200% of the scheme rate – ensuring you are covered for up to 300% of the scheme rate.
Out of hospital procedures
Although gap cover policies typically cover you for the expenses you incur when you are treated in hospital, expensive procedures that were previously done in hospital, but which are now done out-of-hospital in doctors’ rooms, may also be covered.
Questions to ask
Does the gap cover policy list procedures that are covered by the policy even if they are not done in-hospital?
The list should include procedures such as renal dialysis, sinus surgery, the insertion of grommets, tonsillectomies, prostate biopsies, hernia repairs, various scopes and even home births.
Co-payments
Most gap cover policies also cover you for co-payments your scheme imposes for procedures such as spinal surgery, joint replacements, colonoscopies or scans. Some also cover co-payments for hospital admissions.
Some providers offer different combinations of co-payment cover as extended benefits on more expensive policies.
Co-payments are like excesses on an insurance policy and are designed to prevent unnecessary treatment or scans – if you have to make a co-payment you will only have the treatment or scan if you really need it.
Some policies cover co-payments imposed when you use a hospital that is not within a network of hospitals that members of certain medical scheme options are supposed to use.
Questions to ask
Oncology benefits
Many gap cover policies also provide top up cover for oncology, as many schemes have limits on benefits for cancer.
Schemes impose oncology limits to avoid the risk of being exposed to the high costs that come with new treatments. Members are, however, always covered for the cancer PMBs. But typically these are for treatments that are cost-effective for the average member rather than treatments that suit individual needs.
Questions to ask
Other benefits
Gap cover policies differ on a host of other benefits provided. Asking questions about these can help you determine the difference in pricing between policies. For instance:
Exclusions
If your medical scheme has exclusions, your gap cover policy will probably have the same exclusions.
Most gap policies exclude cover for claims that arise from:
Claims arising from participating in hazardous sports, military or police duty, aviation other than as a passenger, or any racing activities are also typically excluded.
Some gap cover providers exclude cover for the PMBs when you do not use your scheme’s designated service providers.
Overall benefit limit
Gap cover polices are subject to overall benefits in terms of the demarcation regulations under the Short-term Insurance Act and Long-term Insurance Act.
These were implemented in March 2017 at R150 000 per person covered by your policy each year. These limits have been increased by gap cover insurers by inflation each year as provided for by the legislation.
Waiting periods
Insurers can apply waiting periods to gap cover policies that prevent you from claiming benefits until the policy has been in place for a certain period.
The two waiting periods that can be applied are:
If you move from one provider to another with no more than a three-month break in your cover, the new provider cannot impose a new waiting period.
Waiting periods for a pre-existing condition may be waived if your employer makes gap cover compulsory for you as an employee.
Who can get cover
Gap cover policies generally provide cover for yourself and your spouse and children, but not all gap cover policies extend to adult dependants.
Gap cover may have an age limit for entry such as 60 or 65. If you take out cover after that age, you may have to take out cover offered to seniors with a higher premium. Policies cannot be individually priced, but can be priced for broader age groups.
Some policies are designed for members of certain schemes only.
Some employers offer employees gap cover on a group basis. The group rate may be a lot cheaper than the rate you can get signing up as an individual.
This is because the insurer considers the risk of the group it insures and if an employer signs up all its employees the insurer is not at risk of anti-selection.
Questions to ask:
