What is gap insurance and why is it essential?

Gap insurance has become a necessary product for most South Africans who want to use private healthcare services. It can be a lifesaver for those who approach specialists who charge far more than is covered by standard medical schemes.

Here we unpack what gap insurance is and why it is commonly overlooked.

What is gap insurance?

Gap insurance provides extra cover for medical shortfalls that may occur for private procedures. The insurance protects existing members of medical schemes from paying the difference when doctors and specialists charge anything above standard medical aid rates.

For example, medical aid may cover a visit to the hospital in terms of the hospital stay, doctor’s fees, medicine and supplies. But if this is only 100% and the private doctor charges a rate of 200%, you will be liable to pay the remaining amount. However, gap insurance will cover the shortfall and stop you from having to use your own savings.

Why is it essential?

With private healthcare costs continually rising and the significant shortfalls that come with medical aid cover, gap insurance is undoubtedly an essential product.

Private healthcare can cost thousands of rands, but the liability for the shortfall can be easily avoided through the purchase of gap cover, which can be paid for monthly. Depending on which scheme you choose to invest in, the cover may account for some or all of the difference between costs, so make sure you do your research to reach the right decision.

It can also pay for treatment for critical illnesses including cancer, strokes and heart attacks, and so will prove to be a vital investment, particularly if such illnesses run in the family.

Expert advice

Carien Steenkamp, communications manager of Sirago Underwriting Managers and Genric Insurance Company, says: ‘Gap cover is a nonnegotiable part of any individual or employer’s healthcare strategy, regardless of age!

‘When you consider that a single gap claim of R60,000 is the equivalent of around 11 years of gap premium payments, gap cover really is an affordable and essential shield from a major financial knock due to a health crisis.’

Younger people are not immune to high claims. ‘The two largest claims in the 0–29 age band were shortfalls not covered by policyholders’ medical schemes and they would have had to pay from their own pockets if they did not have gap cover in place,’ says Steenkamp.

Tony Singleton, CEO of Turnberry, adds that the casualty benefit in gap cover can be crucial in paying out for accidents and illness. He explains: ‘A visit to casualty can run into thousands of rands, and without gap cover this must generally be funded from the member’s own pocket.

‘The last thing anyone needs when they fall and injure themselves, or when a child has a raging fever at 3am, is the thought of how they will be able to afford the visit to the hospital.

‘However, not all gap policies provide cover in the same way, so members need to ensure that they find the right one for their needs.

‘Knowing that you can claim back these expenses from your gap cover offers peace of mind and the security that you can always afford the best healthcare for you and your family.’

Filling the gap in your wallet

The insurance covers both in-hospital and out-of-hospital treatments, such as colonoscopies, CT and MRI scans, and injuries obtained because of an accident or serious illness. Some also offer oncology or cancer benefits, and some cover internal prosthesis costs; however, this is dependent on the chosen gap cover solution.

The downside to gap cover is that a short waiting period can apply, and some treatments may not be covered by gap insurance. Treatments and procedures not conducted by registered healthcare professionals as well as the cost of some equipment will be most likely not be covered by gap insurance. These include cosmetic surgery, crutches and wheelchairs, private or home nursing, and treatment at a non-DSP facility, to name but a few.

Make sure you get the right gap insurance that will cover as many costs as possible for you and your family. You can compare products online, but if you find the choice confusing, speak to an accredited financial advisor or broker who can help you decide on the right product for you.