Mind the gap in your healthcare planning

Published Oct 18, 2022


By Dominique Bowen

You might think that with a comprehensive medical aid plan in place for you and your loved ones, there is no hospital admission – planned or unplanned – that could financially cripple you.

Think again.

Medical aid cover is essential in a well-considered financial plan, but with the important caveat that it doesn’t necessarily cover you completely. Jill Larkan, head of Healthcare at GTC, explains: “Most medical schemes provide full cover if their members see service providers who are within their specific network. Chances are, however, that the provider you are seeing is not within your medical scheme’s network (a case of Murphy's Law), and the bill will therefore include a portion payable by your medical aid, and a portion due by you.”

Like an antidote to hospital-related financial stress, gap cover guarantees peace of mind when any surprise bills sneak up.

Be clear on its purpose

While gap cover can feel like a financial knight in shining armour, or the hero that saves the day, it’s important to understand exactly what its intended purpose is, and isn’t.

It is designed to cushion against the shortfall between what medical specialists charge and what your medical scheme is willing to pay for certain approved in-hospital procedures.

“Many people believe that gap cover includes out-of-hospital specialists’ visits too, which some do to a very small degree, and only if a portion of the cost has been paid by your medical scheme,” Larkan says.

“Gap cover is not a medical scheme product, and it is not a substitute for medical scheme membership,” notes Nonku Pitje, chief growth officer at Discovery Health. Nor is gap cover claimable for most out-of-hospital events. “Many people who ask questions about gap cover believe that it will pay for the gap between what your doctor charges and what your medical scheme pays, not understanding that this product provides cover for mostly in-hospital procedures.”

To ensure cover is used to cover legitimate needs, it’s also worth pointing out that unapproved hospital admissions, including those for cosmetic surgery, are excluded as claimable events. There are further nuances, too, depending on the particular insurer. Make sure you understand the benefits of a policy fully so that you aren’t caught without cover when you need it most. This includes the rules applicable to your specific medical scheme plan, as Pitje explains: “Gap cover cannot be used for claims excluded, not processed or not approved by your medical scheme, such as using out-of-network providers for prescribed minimum benefits or a hospital facility.”

Family planning

Gap cover is not just for the unforeseen and unfortunate events like accidents, illness or other trauma, though its value in easing the financial strain of these can’t be overstated.

Couples looking to expand their brood are often encouraged to explore the addition of gap cover to their financial plan, as it can bridge the gap between medical scheme cover and what, say, an obstetrician and anaesthetist would charge. If you see family planning in your future, financial planning should come before this, as many gap cover providers impose a certain exclusionary waiting period on pregnancy and childbirth – some up to 10 months. Discuss this with your financial planner if adding to your family is in your medium-term plan.

“When completing a financial plan, your financial planner will compare the level of cover that you have from your medical scheme against the rates that many service providers charge – often above the medical scheme rate,” Larkan says. With this knowledge, you are empowered to determine the gap cover you need and can afford.

Affordability factor

The reality is that without gap cover, which is relatively affordable, even with a fairly comprehensive medical aid plan you run the risk of a nasty surprise expense sneaking up on you the moment you look in the direction of a hospital admission.

“It is important to assess the affordability of a relatively small gap cover monthly premium against a potentially significant out-of-pocket expense when a gap occurs,” Pitje says.


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