A good medical scheme adviser can help you to decide whether you need gap cover and, if you decide you do, which products are appropriate.
Gap cover products are difficult to compare, but here are some things to look out for:
* Tariff gap cover. Initially, gap cover products filled only the gap between what your medical scheme paid a specialist and what the specialist charged for any treatment you had in hospital. This gap is referred to as the tariff gap.
Since the striking down of the guideline medical tariffs, the Reference Price List (RPL), most schemes have developed their own rates at which they reimburse specialists. These rates are usually based on the RPLs issued before 2009 and adjusted for inflation.
Gap cover products now typically pay the difference between the medical scheme rate and what a practitioner charges, but in calculating the gap the insurer limits the practitioner’s charge to two, three, four or five times the scheme rate.
At least one gap cover provider has taken a different approach. Guardrisk has avoided the intensive administration that comes with ascertaining what a scheme pays or the delays in paying claims that result from waiting for statements from a scheme to find out how much of a specialist’s bill the scheme has paid, Richard Eales, the executive in charge of corporate risk solutions at Guardrisk, says.
Instead, on its Admed policies, Guardrisk pays out the difference between what your specialist charges and the rate laid down in the 2006 RPL (produced by the Council for Medical Schemes) adjusted for inflation, Eales says. This usually results in members being paid more than their actual gap, because most scheme rates are higher than the RPL rate used by Guardrisk, he says.
* Gaps in cover for hospital costs. Gap cover policies typically do not pay the difference between what your medical scheme pays a hospital in which you are treated and what the hospital charges.
Most of your bill should be covered by your scheme, but there are exceptions. You may have a payment gap if your scheme has a list of hospitals you should use and you use a different hospital (other than in an emergency), or if your scheme pays for you to be in a general ward and you choose a private ward.
There may also be items for which a hospital charges you that your scheme regards as unnecessary and therefore will not cover. A gap cover product will not cover the difference.
You may also have a gap in your medical scheme cover for your hospital bill if your scheme has an overall annual limit on cover and your bill exceeds this limit. Complimed offers a gap cover benefit, Hospital Excess, that covers this shortfall. This kind of cover is referred to as top-up cover.
* Tariff gap cover for out-of-hospital procedures. A number of procedures that were performed in hospital are now being performed in doctors’ rooms or clinics on an out-patient basis to save on the high costs of hospitalisation. As a result, some, but not all, gap cover products provide cover for the difference between what your scheme pays and what a specialist charges for a defined list of out-of-hospital procedures.
Guardrisk and Complimed, for example, have a list of procedures on their gap policies for which policyholders are covered for the difference between what their scheme pays and what a specialist charges. These procedures include cancer, renal dialysis, sinus surgery, grommets, tonsillectomy, prostate biopsy, hernia repairs, various scopes and even birth.
* Gaps in cancer cover. Medical schemes have begun to limit cancer benefits to control their costs in the face of the increasing incidence of cancer and the higher cost of recently developed treatments.
Medshield’s Mediplus option, for example, limits its oncology benefit to R230 000 a year per family.
Discovery Health has limited its fully-paid cancer benefits per 12-month cycle per beneficiary to R200 000 on its Saver and Priority plans and to R400 000 on its Comprehensive plans. Thereafter cancer benefits are unlimited, but there is a co-payment of 20 percent.
Some cancers, but not all, are a prescribed minimum benefit (PMB), which means your scheme is obliged to pay for treatment that is in line with that provided by the state, or you may be expected to use the scheme’s designated service provider.
If you have a non-PMB cancer or you have begun a treatment that is not covered by the PMBs and the cost exceeds your scheme’s cancer benefit limit, you could be faced with a gap in your cover.
Some gap cover product providers have responded to the limits or co-payments on oncology benefits by offering gap cover for these.
Complimed this year introduced a cancer sub-limits benefit at an additional cost to its tariff gap cover. This cover is designed to pay the co-payments or shortfalls you may face for cancer treatment beyond those covered by Complimed’s tariff gap cover. The cancer sub-limits cover pays out for co-payments beyond the scheme’s annual cancer limit and for listed biological drugs.
Stratum, for an additional fee, offers a sub-limitation cancer cover benefit for biological drugs, chemotherapy and radiotherapy. There are four different levels of cover, the highest of which pays for gaps as a result of sub-limits for cancer up to R300 000 a year.
Complimed does not offer its cancer benefit to people who have had cancer before, and Stratum also has an exclusion on any previously diagnosed cancer.
This cover is also referred to as top-up cover by the insurance industry, as is cover for sub-limits, co-payments and deductibles, discussed below.
* Cover for sub-limits, co-payments and deductibles. Some gap cover providers offer cover for that part of your medical bill that may not be met by your scheme because you have reached the scheme’s sub-limit for a particular benefit or because the scheme imposes a co-payment or deductible that the member must pay.
Both Complimed and Stratum offer separate benefits for in-hospital sub-limits and for co-payments.
Xelus offers four different tariff gap cover policies with different levels of benefits to enhance your sub-limits, and have either no cover for co-payments or different combinations of co-payment, or deductible, cover.
* Costs. The costs of gap cover vary a lot, depending on the cover you take. Premiums start at R55 a month per family and increase to R200 a month per family, but if you take a combination of a provider’s benefits you could pay more.
Groups, such as employer groups, typically get discounted premiums, while individuals payer higher rates.
Rates are not based on your age, state of health or the size of your family. Typically, single people pay the same as a family. Tariff gap cover costs about R88 to R98 a month for an individual if your scheme option pays specialists at 100 percent of its scheme rates.
Eales says that you should beware of providers that offer additional benefits on tariff gap products at no extra cost, because these policies may be unsustainable.
* Cover limit. Most gap cover products are sold with a limit on cover of either R1 million or R2 million per family per year, although Old Mutual’s recently launched gap cover policy has a limit of R350 000.
However, the overall limit can be misleading, because most providers also have a limit on the cover paid per event or per individual per year, and this ranges from R100 000 to about R165 000. If, for example, you contract cancer, this is regarded as one event.
The individual cover limit may therefore be more important than the total cover limit, because you are unlikely to hit the overall limit unless you have a big family and are all injured, for example, in a single car accident.
It is also worth considering the size of the claims that gap cover insurers typically pay per policyholder.
Complimed pays out R1 million in claims a month, and Complimed director Peter Hyman says the highest claim it has paid was in excess of R70 000. The average Complimed claim is R3 500, he says.
Eales says in the 12 years Guardrisk has been offering its Admed policies it has only once hit the individual limit, now at R165 000. The highest claim it has paid was R335 000 when a family of three were in a car accident.
* Exclusions. Some providers exclude any benefits for which your scheme does not offer cover. Most gap policies exclude cover for claims that arise from the likes of self-inflicted injuries, suicide attempts, cosmetic surgery and taking narcotics.
Participating in hazardous sports, military or police duty, aviation other than as a passenger, or any race or speed test is also typically excluded. Depression, mental illness, dementia and stress-related conditions are also likely to be listed as exclusions.
* Waiting periods. Most gap cover providers exclude pre-existing conditions for 12 months, although in some cases the exclusion is for only three months. In the case of employees whose employers make gap cover compulsory, the waiting periods may be waived.
Cover for pregnancy for the first 12 months of the policy is also in most cases excluded.
* Medical tests or risk rating. Most gap cover policies do not rate you on the risk you pose to the insurer because of your age or health, but they may have limits on the age at which you can take out cover, will typically make you wait 12 months before you can claim for a pre-existing condition and may offer discounted premiums to healthier employer groups.
* Maximum entry and cover age. There are different maximum ages at which you may take out gap cover policies. In some cases, you cannot take out a gap cover policy if you are over the age of 60. Some providers, such as Guardrisk, have no maximum entry age.
Some policies allow you to enjoy cover for as long as you want it, while others have a maximum age, such as 75, after which you do not enjoy cover.
Stratum has a product that caters for older medical scheme members; the maximum entry age is 80.