South Africans continue to battle financially as the costs of food, energy, transport, and petrol rise. Many families are being forced to restructure their finances to cope with poor economic growth.

Financially savvy folks are eating out less, putting off purchases of high-value items, traveling in lift clubs to work and much more. Medical expenses often come under the spotlight when families are trying to save money.

Some families are forced to downgrade to more basic medical aid schemes when they are experiencing financial difficulties. This is because medical schemes cost more every year and inflation is usually higher than salary inflation. Under these circumstances, families are likely to benefit from taking out some gap cover.

Shortfalls in cover

There is often a shortfall between what a medical scheme pays and the actual cost of a procedure or treatment. This is because service providers are entitled to charge more than the medical scheme rate.

Actual costs can be as much as 500% or more of medical scheme rates and members are forced to cover the shortfall. This may cause more financial stress than ever at a time when finances are already tight.

Why Gap cover exists

The concept of gap cover arose due to this shortfall between what is covered by medical schemes and what is charged by private doctors and hospitals.

Gap cover provides a way to achieve adequate insurance against medical expenses at an affordable monthly cost. It can help to reduce the risks of shortfalls without a significant impact on the monthly budget.

The gaps between costs and medical scheme payments occur in four main areas. The first is when doctors and hospitals charge higher tariffs than medical schemes are prepared to pay.

The second is when co-payments are charged by schemes for higher cost services (an attempt to deter members from having them unless they are absolutely necessary). The third is where annual limits are imposed on cancer or oncology benefits.

Finally, medical aids may put sub-limits in place to limit the amount of cover for a specific event or procedure.

What Gap cover providers offer

Some policies cover the difference between what your scheme pays and what doctors or hospitals charge up to the level of 500%. If your scheme pays 200% and your gap cover provides an additional 300%, you are covered if 500% is charged.

Gap cover can range up to R600 but the cheapest cover costs about R63 a month and provides you with an additional 200% of the scheme rate for doctors who treat you in hospital. Despite this, many families do not have gap cover policies.

More comprehensive policies will cover co-payments and offer enhanced oncology benefits and enhance sub-limits. Some of them offer a combination of certain benefits and others offer most of them. They may cover various other situations such as the cost of being treated for an emergency in a casualty ward.

What they may not cover

If you join a scheme that covers only hospital admissions and chronic conditions, you will not have any gap cover for treatments or procedures that occur outside of the hospital.

Many schemes will reduce your contributions if you use certain hospitals with which it has negotiated favorable tariffs. Some gap providers offer cover for co-payments for not using a network hospital. However, many will limit the number of such claims per person covered.

A final word

As your gap cover works together with your medical scheme coverage, the choice of a provider is important. This is why consulting a broker and having a conversation about gap cover can help you to make the right decision to prevent you from getting into debt from having to cover high medical expenses.

The premiums for gap cover are reasonable and the benefits can make all the difference when you’re faced with costly treatment and procedures.