By Michael Emery, Marketing Executive at Ambledown Financial Services
Times are challenging, and with medical costs on the rise, it’s not surprising that gap cover is becoming an even more important part of the mix.
One of the significant consequences of the COVID-19 pandemic is that consumers have become very aware of the importance of having adequate medical cover in place. And given that medical aid costs are likely to continue rising, and the fact that consumer inflation seems to be in an upward trend, consumers are looking at ways to fund the cover they want.
For those with medical aid, gap cover is an increasingly important way to help finance health care. Basically speaking, gap cover insures medical scheme members against discrepancies between what the medical scheme pays and what the medical service provider charges for in-hospital procedures and defined out-patient procedures. For example, the surgeon and anesthetist might charge considerably more than the medical scheme’s rate for a specific surgical procedure; this shortfall would be covered by the gap cover.
An individual without gap cover would be liable for that shortfall. The same scenario would play out in the case of co-payments (a co-payment occurs when a medical scheme stipulates that the contributor has to pay a proportion of the fee for certain designated procedures).
Gap cover complements medical aid cover because it saves medical scheme members from liability for significant extra expenses when shortfalls or co-payments occur. Despite its important role, it is relatively inexpensive. It is important to note, however, that gap cover is not a medical aid and cannot be used as a substitute for medical scheme cover.
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It is concerning to note that many of those who have access to medical scheme cover as part of their employee benefits are often unaware of the need for gap cover – they simply assume they are “covered”. Alternatively, many employees do not realise that their company medical benefit may actually already includes gap cover.
Employees on a company medical scheme must take the time to engage with the consultants appointed by the company to unpack exactly what their benefits are, and what they are covered against. If they are not appropriately covered, then they should seek advice on how to the right level of gap cover.
The same goes for private members of medical schemes. Enlisting the help of a reputable broker will pay huge dividends in helping them to understand exactly what benefits are required, and what level of gap cover is needed.
According to current figures from Statista Research, only 16% of the South African population is covered by medical aid, with the vast majority dependent on the state healthcare system. An emerging trend is that the cost-of-living crisis is forcing many people to reconsider and downgrade their medical scheme membership.
It’s going to be a bumpy year in all sorts of ways. Making sure you have the most appropriate cover for your circumstances is a great way to smooth your path to financial freedom by eliminating one major potential bump.
Ambledown Financial Services is authorised Financial Services Provider No.10287