Due to the fact that medical specialists’ fees are not regulated in South Africa, medical schemes have placed an upper limit on the amount that they are willing to cover. This is where gap cover comes into play.

Gap cover is a short-term insurance product that cover mainly in-hospital shortfalls in the difference between what hospitals, doctors or specialists charge, and the rate that a medical scheme is willing to pay. While medical schemes pay up to 100% of their own medical scheme tariffs, medical practitioners can charge up to 500% of these amounts. It is important to remember that gap cover is not a replacement for medical scheme membership and that gap cover is not applicable to health insurance products.

Gap cover is also different from top-up cover, which covers payments after medical scheme benefits have been exhausted, and hospital cash plans, which pays out a set amount for each day of hospitalisation of the insured. Costs applicable to gap cover are dependent on the nature of the cover required. Options include cover for medical scheme co-payments, sub-limits and cancer treatment shortfalls. Gap cover does not provide cover where medical scheme cover does not pay towards a procedure or covers the full cost of a procedure.

The Department of Health and National Treasury published demarcation regulations defining the roles of medical schemes and insurance products in December 2016. These regulations prescribe a three-month general waiting period and a 12-month condition-specific waiting period with pre-existing conditions. The maximum age of 60 years for coverage by insurers who offer gap cover was scrapped. These regulations currently limit the total medical expense shortfall benefit to R173 000 per person in a calendar year.

Under the regulations medical scheme members who move between medical schemes will not be subject to additional waiting periods for gap cover benefits, on the condition that the service provider is notified of the change. Members can also change their gap cover to align with the benefits provided by the new medical scheme.

Gap cover offers cover in addition to things that a medical scheme would normally pay for. If you had an emergency visit to the ER and you have a medical scheme with a medical savings account, you would be able to claim this visit from your savings. On many of the cover plans available, you will then be able to claim a reimbursement for this event. This would also apply for out-patient procedures such as MRIs, CT scans, chemo, radiotherapy and kidney dialysis.

If you have a hospital plan, many out-of-hospital benefits won’t be covered as these plans only cover you for procedures when you are admitted to hospital. Cover for mental health treatment is limited and cosmetic procedures are excluded from gap cover.

Other medical costs that gap cover will not pay for include:

• 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
• Transportation costs, for example, ambulance
• Out-of-hospital dental treatments
• 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 is suitable for all medical scheme members who do not want to risk having to cover a partial payment of the amounts charged by medical service providers.

The information contained in this article is of a general nature and intended for information purposes only. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial, legal or other issue. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner/adviser to take into account your particular investment objectives, financial situation and individual needs.