Gap cover ‘still crucial’ to prevent in-hospital medical bill surprises

Feroza Joosub, Head of Sanlam Gap Cover.

When stricter regulation for Gap Cover come into play in April this year, it is important that we are not discouraged from taking out this crucial form of medical insurance, says Feroza Joosub, Head of Sanlam Gap Cover.

The so-called new ‘demarcation regulations’ are expected to cap the future pay-out for each insured person at R150 000 per year. New Gap Cover policyholders will have to comply with the new demarcation regulations under the Short-term Insurance Acts from 1 April; whereas it will apply to existing policyholders from January 2018.

“Previously, there was no limit to the amount gap cover providers could pay out to policyholders. But since the average claim amount for the industry during 2016 was only around R8 000 to R10 000 per individual for the year, the new limit of R150 000 shouldn’t have that much impact on the average consumer,” Joosub says.

Gap cover pays for the shortfall between what medical schemes pay for hospital procedures and certain out-patient services, and the tariffs charged by medical professionals. “You may think that if you’re a member of a medical scheme, you’re fully covered for all in-hospital expenses, but often, you’re not. In most cases, there’s a difference between what a specialist charges in hospital, and what your medical scheme will cover. Sometimes, the actual cost may exceed the medical scheme rate by five times.”

Joosub says there may be instances where medical bills may be really high – for example in the case of heart bypass surgery, where specialists could charge even higher than 500% of medical scheme rates. In such a case, the gap cover pay-out limit of R150 000 may well not be enough to cover the shortfall.

“In most cases however, if you have gap cover, you can be certain that if you have to undergo a medical procedure and you get saddled with a co-payment or a payment shortfall, your gap cover will be enough to ensure you are not out of pocket, as long as the procedure has also been covered by your medical scheme. But even if it is not enough, you still have the peace of mind that the first R150 000 will be paid out by your gap cover policy.”

“Having medical aid without gap cover can mean if something big happens you still have to cover a large portion of in-hospital fees. So, in our view, it remains a critical part of a person’s overall insurance cover, even under the new regulation,” Joosub concludes.