FANews
FANews
RELATED CATEGORIES
Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Supreme Court gives Guardrisk go-ahead for South Africans to insure gap between medical aid rates and actual health costs

31 March 2008 Guardrisk

Regardless of which option of cover you have chosen on your medical scheme, the reality is that you may need to fund the difference between what your medical aid pays and what your treatment really costs.

In the case of hospitalisation, the size of this gap could spell financial ruin for many South African families. In response, Guardrisk – and parent company Alexander Forbes – developed a cost-effective product: Admed, allowing families to insure the gap between the National Health Price List Tariffs (medical aid rates) and what doctors charge for in-hospital treatment. To date about 55,000 families have purchased this cover from Guardrisk.

However, the CMS (Council for Medical Schemes) took issue with Guardrisk’s Admed gap product, claiming that the company was conducting the business of a medical scheme as defined in the Medical Schemes Act. Litigation – instigated by the CMS – followed and Guardrisk lost the initial case. However, the High Court – of the opinion that another court may produce a different ruling and in deference to the significance of the matter – granted the company leave to appeal. This culminated in the Supreme Court of Appeal’s ruling last week that Guardrisk’s Admed gap products do not fall within the scope of the Medical Schemes Act.

Says Herman Schoeman (pictured right), Managing Director of Guardrisk, “This ruling provides peace of mind for our clients who can continue to rest assured that they remain covered for the shortfall between doctors’ in-hospital charges and medical aid rates.

“Had the ruling gone the other way it would have impacted significantly on the entire short-term insurance industry. However, it is important to note that this ruling specifically relates to Guardrisk and its product range. It should not, in any way, be construed as a general industry standard and individual insurers will have to examine their own products to measure their validity.”

Says Schoeman, “One of our arguments was that Guardrisk’s Admed gap cover products did not encourage people to take cheaper options in their medical schemes. Nor did they offer the lower end of the market an alternative to medical cover. Simply put: Guardrisk’s gap cover insurance in no way threatens, competes with or compromises medical schemes. In fact, since you need to be a member of a medical aid to buy the Admed gap cover, it actually encourages the purchase of medical aid.

“Though we still need to examine the detail of the Supreme Court of Appeal’s ruling, we are pleased that the court has brought clarity to the debate and has found a way to allow Guardrisk’s Admed products to continue complementing traditional medical aid schemes products, ensuring that South African families do not become financial victims of the shortfall between medical aid cover and the real costs of doctors’ in-hospital treatment,” concluded Schoeman.

Quick Polls

QUESTION

How do you help your clients to maintain perspective when they get overwhelmed by today’s doom and gloom headlines?

ANSWER

Focus on long-term goals
Highlight global innovation
Reinforce diversification
Still figuring it out
fanews magazine
FAnews February 2025 Get the latest issue of FAnews

This month's headlines

Unseen risks: insuring against the impact of AI gone wrong
Machine vs human: finding the balance
Is embedded insurance the end of traditional broker channels?
Client aspirations take centre stage as advisers rethink retirement planning
Maximise TFSA contributions before year-end
Subscribe now