Brokers shed light on common questions about gap cover

Johannesburg - For many South Africans, gap cover remains somewhat a mystery. Three brokers with experience in dealing with many clients reveal what common concerns are – and what consumers should understand about the role that they play. 

One of the biggest issues is that people confuse gap cover with the self-payment gap. Gap cover is designed to cover the difference between what the medical scheme pays and what the service provider actually charges for in-hospital procedures / treatment and specified out-patient procedures; by contrast, the self-payment gap occurs when a medical scheme member exhausts his or her medical savings account.

“Members sometimes think they can claim from their gap policy for normal day-to-day expenses when they are in the self-payment gap,” says Melody Perotti, Healthcare and Employee Benefits Manager at Saint Andrews. “Despite having the word ‘gap’ in common, they are completely unconnected.”

Charleen Rix, Head of Healthcare at Sasfin, agrees. “One can’t just assume that a gap policy covers everything the medical scheme doesn’t,” she says. “It’s a common misconception that if a medical scheme doesn’t cover something then the gap cover will kick in, whereas in fact the gap policy only covers the difference between the medical scheme’s benefit limit or rate and the payment charged by the service provider, whilst in hospital and within specified limits.”

Why should I choose to work with a broker?

The abovementioned examples show just how easy it is to get muddled. Westley van Rooijen, Head of Healthcare at Austen Morris Associates argues that the broker’s role is getting more and more important.

“The industry is highly innovative, so one sees new products launching all the time. This is a complex area, so it’s very difficult for consumers to understand the intricacies of all these new products,” he says. “As members of a highly regulated profession, brokers are best positioned to help their clients understand which products best suit their needs, which will change as their life circumstances change.”

Perotti says that brokers have the insight and tools to help establish what a client’s medical needs are, and then to find the right plan for them. “Dealing with a broker who is independent is most beneficial because the broker is able to shop around and find what is best for the client,” she says.

Austen Morris’s Van Rooijen adds that medical schemes’ plans are designed to meet the needs appropriate to an average South African’s life stage. “We often find that a client is on a plan that doesn’t suit where they are in their life, and don’t have the benefits they need,” he says.

Sasfin’s Rix agrees, saying that a thorough medical needs analysis is vital in evaluating what a client and his or her family needs are, and then matching the plan to the client’s budget. When considering the budget, it’s very important to go into what is covered and not covered very carefully. “Paying more for increased benefits could actually save money during a year when big expenses are anticipated, whereas going for cheaper cover might mean that high expenses are not covered, and the member is seriously out of pocket,” she says. “The broker should also help the client assess the sustainability of the medical scheme itself.”

Why do brokers think gap cover is important?

Clients often believe that once they have joined a medical scheme their medical costs are covered. Nothing could be further from the truth, says Perotti. “The reason why I’m so personally invested in gap cover is that the general “man on the street” doesn’t always understand the medical scheme jargon and when medical scheme’s talk about claims being paid at 100% or 200%, the understanding is always that basically when in hospital everything is covered. This is not the case when it comes to the providers – the specialists and anaesthetists can charge whatever they like,” she says. Gap cover would cover the shortfall.

Because medical professionals are not regulated in terms of cost, Rix believes that gap cover is no longer a nice-to-have but a necessity. The lack of regulation in terms of what medical professionals can charge means that the shortfalls faced by medical scheme members is escalating all the time, especially when they are admitted to hospital.

Perotti adds that many medical schemes have co-payments or deductibles for certain procedures, such as neck and back operations, which can be quite costly. These amounts can be claimed back from the gap cover, she notes.

“We recently had a client who would have needed to find R70 000 to cover costs related to a hospital stay, had he not had a Gap policy,” says Rix.

Nevertheless, one should always bear in mind that gap cover is not a substitute for membership of a medical scheme, but a complement to it. In certain cases, one’s gap cover may need to be upgraded in line with the annual benefit and contribution updates to their medical scheme - the two are separate contracts, Rix notes.

“Given the rate of medical inflation, advances in medical care and the constant stream of new products, it’s never been harder to ensure that your medical needs are properly catered for,” says Ambledown Financial Services Marketing Executive, Michael Emery. “Consumers would be well advised to stay close to their brokers to get the necessary expert help in working out what their needs are and what combination of medical aid and gap cover will best meet their requirements.”