Gap Cover - know the difference
Since the abolition of medical industry tariffs, the South African private healthcare system has become increasingly expensive with benefit levels reducing over this time.
This has resulted in the rise of Gap Cover, which has seen its fair share of controversy as Government is clearly not particularly fond of the gap cover concept.
A place of its own
Whether we agree with Government’s view on the debate or not, Gap Cover does seem to have a place in society.
Richard Eales, Executive Director of Guardrisk Insurance, points out that those clients who have elected to purchase Gap Cover generally have a clear understanding of how it fits into their healthcare plans, be it due to previous experience of medical payment shortfalls or as a result of their proactive planning.
“Clients who have Gap Cover through their company’s employee benefit programme, however, usually only fully understand where this cover fits into their healthcare plans once they have been through a claim event and have been able to successfully claim shortfalls from their Gap Cover,” says Eales.
A product to suit the masses
While medical schemes need to protect the health of their clients, it is impossible for them to be all things to all people. There is a definite trend in the industry for clients who are calling for tailor made health cover to suit their specific needs and interests. A possible avenue for this is through Gap Cover, however, this may not be as easy as pushing buttons.
Michael Settas, Managing Director of Xelus, points out that clients wanting to purchase gap cover tend to go for a comprehensive one-size-fits-all approach. “The private healthcare market is incredibly complex and consumers are bewildered by the abundance of detail. So creating a one-size-fits-all gap cover product limits the complexity, makes the product choice a simple process and provides cover for all possible in-hospital shortfalls,” he says.
“Younger people have less of a chance of being hospitalised than older people, but the size of a shortfall if hospitalisation does occur is not related to age. Something like a car accident (which happens more with younger people) would probably represent a much higher shortfall risk than a scheduled procedure as the time in hospital is generally much longer,” says Settas. It is therefore vital for members of all ages to ensure that they are comprehensively covered for all in-hospital events as it remains impossible to predict what treatment may be needed.
Popular misconceptions
While Gap Cover is vital in the current South African context, there are misconceptions regarding the nature of Gap Cover.
“Many clients misunderstand the difference between Gap Cover and Hospital Cash Plans. Whilst Gap Cover specifically covers shortfalls in medical bills due to hospitalisation, Hospital Cash Plans pay out a fixed Rand amount for each day spent in hospital (subject, of course, to waiting or exclusion periods as well as policy terms and conditions),” says Eales.
Another misconception is that Gap Cover pays out once a person’s medical scheme limit for a certain treatment has been exhausted. This is not the case, as Gap Cover is intended to pay the difference between the private cost charged by a medical practitioner or institution and the medical scheme tariff paid by the medical scheme involved. It is not intended to “pick up” on medical bills once the client’s medical cover has run out.
Revisit the constitution
South Africa has one of the most progressive constitutions in the world. In it, it states that it is every citizen’s human right to have access to the best healthcare possible.
If a person wants to send their child to a private school, they are entitled to do so, provided they can bear the costs. Many people opt for private healthcare over public healthcare by choice, and these people are prepared to pay for the service. Gap Cover has a place in society because there is a demand for it.
