While you may have some form of medical aid plan, depending on its structure, more
often than not the scheme will not cover all the doctor and other specialist fees, or all
procedures in hospital. Medical gap cover pays the difference between the medical
aid rates and the higher actual cost charged. Therefore, rather than a standalone
product, it is a short-term insurance product that works in conjunction with your long-
term medical aid.

What Medical Aid Rates Mean

In South Africa, medical aid rates are not regulated, however there are
recommended tariffs related to different in-hospital treatments and procedures which
medical aid schemes will use as a guideline.

"The majority of people believe that if their medical aid pays out according to 100%
medical aid rates for in-hospital expenses, they're fully covered," says Alexia
Graham, Director, Hippo Advisory Services. "This isn't true as medical aid rates are
fixed tariffs used by medical aid schemes and when settled at 100% provide the
lowest level of medical aid cover." In fact, specialists can charge up to 500% or five
times the reimbursement at medical aid rates.

The medical aid rate, then, is essentially the amount that a medical aid scheme will
pay for specific treatments and procedures - often this is not enough for expensive
specialist procedures in hospitals.

What Medical Aid Schemes Don't Cover

Claims are often not paid out in full because medical aids limit the amount they pay
out for expensive procedures, which causes a shortfall between medical costs and
medical aid reimbursements.

Generally, not all expenses are paid by a medical aid scheme for the following
treatments and procedures:

• Specialist in-hospital rates.
• In-hospital procedures for scopes, scans and specialist dentistry, where co- payments exist, and which members pay from their own pockets according to rates determined by the medical aid scheme.
• Procedures which are frequently performed and where expenses fluctuate widely according to the levels of technological sophistication used to perform them. For example, in the case of joint replacement surgery, restrictions in terms of the amount that medical schemes are prepared to pay for certain in- hospital procedures or prosthetic devices may apply and which, in medical aid terms, are referred to as sub-limits. Members need to pay the hospital excesses upfront before receiving treatment or ordering a prosthesis.
• Oncology treatment provides unlimited cover after members have reached a specified cash limit, called a sub-limit. However, scheme rules apply before and after sub-limits are reached regarding co-payments and protocols, such as, not paying for cancer treatments which haven't passed clinical trials.

How Gap Cover Helps Out

Gap cover payouts vary between policies but generally remit between two to five
times, according to an expressed multiplier, what your medical scheme has paid out
for a particular procedure.

For example, if your specialist bill is R25,000 and your medical aid pays R7,000
towards these costs, your gap cover could pay out between R14,000 and R35,000
over-and-above medical aid payments.

Specialist bill: R25,000
Medical aid pays out: R7,000
Gap cover pay out 2 x R7,000 = R14,000
Gap cover payout 5 x R7,000 = R35,000

Some gap cover policies will also offer limited cover for certain out-patient costs and
such as:

● Accidental death
● Casualty
● Disability
● Oncology
● Co-payments
● Premium waivers where insurers don't charge premiums for a specific time
should the insured become unable to work.

All gap products cover specialists who charge above medical aid rates. All gap cover
policies are subject to a maximum annual Overall Limit of R165,000.

Is Gap Cover Wise on a Strict Budget?

For those earning R10,000 or less a month and are on a budget-friendly medical aid
scheme, gap cover is not advisable. "If money is tight, it may be more economical to
take the trouble to seek out a medical specialist who will agree to provide the
services for the medical aid reimbursed rates, even though this may be time
consuming or the practice less convenient for the member," says Alexia Graham,
Director, Hippo Advice.

Many of the more affordable medical aid plan options are capitated, which means
that medical aids pay a defined flat fee for each member - per capita - belonging to
the scheme. This payment is made to specific health care providers, like clinics,
doctors, and dentists, who are obliged to treat scheme members. Members receive
savings on procedures and never need to pay shortfalls. However this type of
medical aid product has strict rules and protocols, and mainly only provides cover for
basic procedures rather than advanced treatments. For members of capitation type
medical plans, gap cover is generally unnecessary.

"If a member on a tight budget earning more than R10,000 per month buys a hospital
plan or general cover plan, we strongly advise them to take out gap cover," says
Graham.

Considerations When Taking Out Gap Cover

When taking out gap cover, first work out how it will supplement your medical aid
plan. Bear in mind that gap cover never pays for expenses that are not funded by a
medical aid, but rather what a medical aid short pays.

Ask yourself the following questions:

1. What tariff does my medical aid use to reimburse in-hospital expenses?
(Remember, 100% is the lowest level of cover)
2. How is my oncology benefit structured?
3. Which in-hospital procedures are subject to co-payments or sub-limits on my
chosen product?
4. Would it be less costly to upgrade to a more expensive medical aid option
with higher benefit levels for in-hospital procedures or is it cheaper to get a
similar level of in-hospital procedure cover by taking out an add-on gap cover
insurance plan? You can compare the in-hospital benefits offered for the cost
of different options and then make a budget wise decision.
5. Do I suffer from any medical conditions that might be subject to waiting
periods or exclusions under the gap cover policy?

What Gap Cover Won't Pay For

• Ward costs in a hospital or step-down facility
• Upgrades to a private room
• Pre-admission consultation costs
• Medication, both in-hospital and take-home
• External prostheses, for example, a prosthetic leg
• External appliances, for example, wheelchairs or crutches
• Routine medical examinations, for example, ultrasound
• Home or private nursing
• Extra costs related to weight, for example, Body Mass Index (BMI)-related
procedures
• Mental health disorders
• Transportation costs, for example, ambulance
• Out-of-hospital dental treatments
• Cosmetic procedures
• Costs incurred for treatment by a medical service specialist who does not
have a contract with your medical aid scheme
• Co-payments for any procedure for which you are in a waiting period

Gap Cover Waiting Periods

If you're taking out gap cover for the first time, there are waiting periods to which you
need to adhere, with the following two being the most noteworthy:

General waiting period – only claims relating to injuries from accidents
can be submitted during the first three months of cover.
Pre-existing conditions – precludes you from submitting claims for pre-
existing conditions for the first 6 to 12 months of cover. This includes any
illness or condition treated 12 months before taking out your policy and
includes pregnancy and childbirth.

Prices and benefits vary for different gap cover policies. Ensure you know
which one works best for you by comparing quotes and asking for advice from the experts.

Disclaimer: This article is for informational purposes only and should not be construed as financial, legal, or medical advice.