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Group gap cover – a strategic employee benefit for financial security and accessible healthcare

26 June 2024 James White, Director of Sales and Marketing at Turnberry Management Risk Solutions
James White

James White

In the past, employers would subsidise medical scheme contributions, but as medical inflation has risen along with the cost of medical procedures, this has become an exercise that is simply too expensive for most.

Gap cover, however, remains a cost-effective option that employers can offer their staff, and the benefits of group gap cover are numerous, particularly in an economy where many people are forced to downgrade their medical aid due to affordability factors.

The affordability challenge
Medical aid premiums are increasing at a faster rate than the consumer price index (CPI). This not only means that there are few employers that can afford to subsidise them, but also that people are looking for more cost-effective options than the top plans to suit their budget. Many people are opting to move from comprehensive medical aid options to lower options and even hospital plans. However, with reduced premiums comes reduced cover as well as smaller networks of designated service providers (DSPs) that will provide full cover options.

On lower medical aid plan options, there are typically higher and more frequent co-payments, including penalties for the use of non-DSPs, increased sub-limits for a wider range of procedures, and greater medical expense shortfalls. These entry-level plan options will generally cover between 100% and 200% of the medical scheme rate, but frequently, specialists will charge many times more than that, often up to 600%. This shortfall is then up to the patient to cover, and it can end up costing tens of thousands of Rands. In trying to save money by downgrading medical plans, people can end up in far worse financial straits.

The advantages of group gap cover
Gap cover is becoming an essential insurance for people who want to access quality medical care while balancing their budget. It offers cover for the co-payments, sub-limits, and medical expense shortfalls that increasingly occur for a premium of only a few hundred Rands a month. Companies can access group gap cover, which gives employees access to discounted monthly premiums as well as favourable underwriting, including waiving typical gap cover limitations such as waiting periods.

With gap cover in place, employees can get the medical care they need without the stress of the large financial burden that medical expense shortfalls can incur. Some gap cover providers also offer added value in the form of trauma counselling and other benefits. This means they will be healthier and happier in body and mind, which translates into more productivity in the workplace. In addition, employers will not have to provide company loans to assist employees in paying for co-payments, sub-limits, and shortfalls. This is a significant reduction in admin.

Becoming an employer of choice
For employers looking to add value for their staff in a cost-effective manner, subsidising gap cover premiums can make a massive and meaningful difference, which can tip employers over the edge when it comes to attracting and retaining the best talent. Working with a broker, employers can educate employees as to the benefits of having a gap cover policy in place, help them ensure they are on the best medical aid for their needs and budget, and then match the gap cover option to this.

Even if companies cannot afford to subsidise the premium, it can still be hugely beneficial for staff, as it costs employers nothing, while employees access the benefits of reduced premiums and the peace of mind and financial benefits that having gap cover provides, as well as cover for their entire family. It is a simple process that can be done via payroll deduction, with the gap cover provider sending a single invoice for a single payment every month, and it can make a world of difference for employees.

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