From ‘nice to have’ to necessity – how gap cover has become an essential part of effective financial planning

Tony Singleton

South Africa’s private healthcare landscape has undergone significant shifts in recent years, as costs rise and new treatments come into play.

Medical aids must balance the affordability of premiums while still providing the best level of care possible. This has led to more limitations on what medical schemes cover, and co-payments and sub-limits have become more prevalent as a result. At the same time, South Africans are facing financial pressure due to economic challenges, and downgrading medical aid options is one way people are looking to reduce their monthly expenses. Gap cover has become an essential and affordable tool in making up for shortfalls in cover and supporting both overall financial and physical wellbeing.

Everything costs more
Since the Covid-19 pandemic, the whole world has faced economic challenges, and the knock-on effects of lockdowns and supply chain challenges continue to be felt to this day. Many people are faced with reduced income coupled with increased expenses, and top-tier comprehensive medical aid plans are increasingly unaffordable. However, the lower plans offer correspondingly decreased coverage, which means that in the event of a healthcare issue, such as an accident, surgery or illness, patients may be left with even greater expenses due to shortfalls that need to be paid out of pocket.

Inflation affects the medical sector too
With the global economic turmoil, the term ‘inflation’ has once again become a buzzword, but it is not something that is limited to consumers. Inflation affects the medical sector as well, and the gap between what medical aids pay for (the scheme rate) and what certain doctors and specialists charge is continually widening. It is common for costs to be two to three times the scheme rate for many procedures.

Advanced technology costs more
These two challenges are coupled with significant innovations in medical technology, including robotic assisted surgeries and next-generation cancer treatments. While these advancements often result in improved outcomes including reduced pain and less recovery time, they come at a cost – a purely financial one. New treatments cost more, and as a result many medical aid schemes have implemented a ‘global fee’ that determines how much they will pay. This global fee is a fixed sum that will be paid for a treatment, and any amount over and above this will be for the patient to cover out of pocket.

Affordable cover to protect your health and wealth
While South Africans cannot do much about the increase in cost of day-to-day living and medical treatments, this does not mean that access to private healthcare needs to be completely unaffordable. Gap cover, once a ‘nice to have’ additional insurance, has fast become a necessity. Many people have downgraded their medical schemes to save on their monthly contribution, but this could cost them much more should they need medical assistance.

Gap cover is an affordable way to plug this gap, providing cover for medical expense shortfalls up to multiple times the scheme rate as well as cover for co-payments and sub-limits and many other value-adds, all for a few hundred Rand a month. For anyone looking to safeguard their financial future from potentially tens of thousands of Rands in out-of-pocket medical expenses, gap cover is essential. Speak to your financial advisor or broker to find the best combination of medical aid and gap cover to suit your needs.