The average monthly contribution to belong to a medical scheme is R2,104, according to the Medical Schemes Council. However, affiliation to the medical plan does not mean that your medical expenses will necessarily be covered in full if you are hospitalized. And that’s where spread coverage comes in – to cover the co-payment.

“The reality is that medical plan coverage can cost 20% or more of a household’s disposable monthly income. If you consider the hyper-inflationary growth in health care costs, the annual medical plan is increasing by 8% to 10% and the fact that salary increases have come down to lows of 3% to 4% per year, or even not at all, it’s clear that medical plan costs are eating up a much larger share of monthly household income than ever before,” says Martin Rimmer, CEO of Sirago Underwriting Managers.

Gap coverage is a form of short-term insurance that protects you and your family against unexpected shortfalls in medical expenses for specific inpatient and outpatient procedures, helping to avoid potential financial catastrophe. after a major medical event.

Jill Larkan, healthcare manager at GTC Consulting, says gap coverage is often misunderstood. “You must be on the medical plan as gap cover is supplementary and does not replace a medical plan. It is not intended to cover specialist costs unless that specialist is treating you in hospital and there must be partial payment for your medical aid,” she explains.

Gap insurance covers the difference resulting from the rate specialists charge for hospital procedures – which are often up to 300% to 500% higher than the rate paid by your medical plan. For example, if your medical plan option only pays 100% of the rate, then you will be required to pay the shortfall of the remaining 200% to 400% billed by your health care provider as “out-of-pocket” expenses. “.

Out-of-pocket spending on hospital services grew at an annual rate of 14.9% between 2013 and 2019, according to a Southern African Health Journal study of the Board of Healthcare Funders. Rimmer explains that revenue shortfalls occur in several ways, including:

• Surgeons, anesthesiologists and other specialists charge more than the contracted/agreed rate with your medical plan for certain hospital procedures;
• Your medical plan applies co-payments or deductibles on certain hospitalizations and/or procedures; and
• Some hospital items and devices have annual sublimits, for example, internal prostheses used in a joint replacement procedure.

To keep up with inflation, contributions to the medical plan increase each year while benefits tend to increase at a slower rate. Inflation (CPI) is around 5.5% and medical inflation would be estimated between 7.5% and 8%.

Bianca Viljoen, director of marketing at Agility Health, says the price increases above inflation are largely due to aging and increased disease burden as well as increased use on the healthcare side. supply, such as new technologies and medicines. Last year was the first year in more than a decade in which average medical plan premium increases of 2.9% were below inflation. This was largely the result of advice from the Council for Medical Schemes and efforts by medical schemes to provide members with financial assistance during Covid-19.

Lee Callakoppen, senior director of the Bonitas Medical Fund, says hospital admissions are one of the biggest cost drivers for private medical plans and concerns about increased utilization and higher rates are expected to lead to more co-payments for members of the medical scheme.

South Africans who usually negotiate the costs of services such as plumbing and repair work have not yet realized that the costs of specialist doctors are neither regulated nor set in stone.

Rimmer says you should always negotiate the price of any planned surgery with healthcare providers before and ask for an official quote. “That way, there are no surprises or unforeseen costs after the fact that you would have a hard time disputing, unless there were specific complications during the procedure. Finally, beware of doctors who ask you up front whether or not you have gap coverage – overcharging based on a client’s insurance portfolio is a growing unethical practice by some doctors unscrupulous specialists who seek to capitalize on the patient’s insurance coverage by overcharging, knowing that the patient has the insurance to cover the inflated price,” he warns.

When choosing gap coverage, Michael Emery, marketing manager at Ambledown Financial Services, suggests you speak to a financial adviser. “Don’t always choose the product that offers the most benefits. The right level of coverage should minimize shortfalls with gap coverage up to 600% less than the medical plan reimbursement rate. It must guarantee members the latest correct aggregate limitation, as stipulated by the regulator.

At the higher end, gap coverage options could help pay for medical hospital admission co-pays, and may even offer cancer coverage and dread disease benefits.

Emery insists that your gap coverage provider should be easily accessible to you. This results in a service provider that has simple registration processes; may settle claims using online or mobile technologies; and has a reputation for paying claims quickly. “Ideally, you should be able to register or submit a claim quickly and easily via your mobile phone and have access to 24/7 ambulance medical assistance. A Covid-19 self-assessment screening and support line would also be helpful,” he says.

If you have gap coverage, it is your responsibility to submit claims to your provider. Your provider also doesn’t have to be the same company that administers your medical plan. For example, membership in the Discovery Medical Scheme does not mean that you have to purchase gap coverage with Discovery. You can use another spread coverage provider.

Ambledown Financial Services has provided the following examples of costs for two procedures – tonsil removal and knee ligament repair – to illustrate how gap coverage could be used. DM168

This story first appeared in our weekly newspaper Daily Maverick 168 which is available for R25 from Pick n Pay, Exclusive Books and airport bookstores. To find your nearest retailer, please click on here.

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