Medical aids may not always fully cover in-hospital tariffs, leaving South Africans to pay the difference from their pocket. Picture: Rawpixel.com/Freepik.
By: Samantha Drake
Medical aids may not always fully cover in-hospital tariffs, leaving South Africans to pay the difference from their pocket. Although gap cover can help provide financial protection against tariffs not covered by medical aid, Sanlam estimates that less than 10% of South Africans on medical aid have this cover. Gap cover is a necessary investment that gives South Africans peace of mind and security.
In today’s health-care landscape, where costs are constantly rising, having the additional layer of gap cover is not just a luxury but a necessity. Medical aid alone may not provide sufficient financial protection against unforeseen expenses. Gap cover, a short-term insurance product that offers financial protection for individuals with medical aid, covers the difference or shortfall between what a health provider may charge and what the medical aid pays from the risk or hospital benefit.
What is a medical gap cover?
All gap cover policies in South Africa pay up to the overall statutory limit of R198 660 per person per annum and increase in line with the annual legislative limit, ensuring South Africans are covered comprehensively.
South Africans must understand that gap cover does not replace medical aid. Rather, it aims to cover shortfalls where health providers charge above the medical aid rate or your medical aid option has a sub-limit on a benefit or charges a co-payment for a procedure. Gap cover cannot provide coverage where the medical aid does not pay towards a procedure from the risk or hospital benefit.
Specialists who charge well over the general medical aid rates or tariff also contribute to the growing need for gap cover. The increasing health-care costs make gap cover an increasingly attractive option for those seeking more comprehensive protection and peace of mind.
Common misconceptions about gap cover
There are several common misconceptions about gap cover. That’s why South Africans should try to understand their gap cover policy terms and conditions. Some of the misconceptions include:
Gap cover provides comprehensive medical insurance coverage like medical aid: Gap cover supplements medical aid plans by covering out-of-pocket expenses like co-payments, deductibles and in-hospital shortfalls.
Gap covers all medical expenses: Gap cover has some exclusions and limitations, such as pre-existing conditions or non-medical expenses. Some people may also mistakenly believe that gap cover is mandatory or a replacement for medical aid when it is optional and works alongside medical aid coverage.
Gap cover is the same as a hospital cash plan: Unlike gap cover, which covers medical expense shortfalls, hospital cash plans pay out a daily cash amount to the policyholder for each day they are in hospital, so, hospital cash plans are not a substitute for gap cover or medical aid.
The state of SA’s gap cover claims
Given the increasing health-care costs and downgrading of medical aid plans, it’s not surprising that gap cover claims have risen over the past year. Sanlam has seen a 35% increase in claims cost and a 31% increase in claims between the 2022/23 period.
As the years go on, it is no secret that the financial implication of inflation, fiscal deficits and cost of living have caused many South Africans to rethink their expenses and health cover. As a result, many South Africans have downgraded from more comprehensive options, creating more room for gap cover to carry the costs not covered by the options.
Bridging the medical gap
As health-care costs continue to rise and medical aid plans face increasing pressure, the role of gap cover in providing financial protection for South Africans is more crucial than ever.
By understanding what gap cover is and why people need it, South Africans can make informed choices about their coverage. Bridging this gap between medical aid coverage and out-of-pocket expenses allows more South Africans to live with confidence.
* Drake is a senior manager of sales and marketing at Sanlam Gap.
PERSONAL FINANCE