The difference between medical costs and health insurance or medical aid cover often leaves individuals vulnerable to unexpected expenses. Herein lies the significance of gap cover. This is a supplementary insurance policy designed to safeguard individuals against a shortfall payment. While it’s imperative to have quality healthcare coverage in South Africa, it helps to have additional security so you don’t have to worry about being burdened by out-of-pocket expenses for specialised treatments or hospital stays that exceed your coverage limits. Discover why a medical shortfall payment can occur and how gap cover functions as a buffer, absorbing the difference between what healthcare providers charge and what medical aid plans cover.
What is a medical or healthcare shortfall payment?
A shortfall payment refers to the portion of medical expenses that an individual must pay out-of-pocket because it exceeds what is covered by their health insurance or medical aid plan. When the cost of the medical services or treatments exceeds the coverage limit or falls outside the scope of the policy, the primary policyholder is responsible for paying the difference. This shortfall payment can arise due to various factors such as deductibles, co-payments, or services not covered by the plan.
Shortfall payments – despite having healthcare cover
Individuals may encounter medical shortfall payments despite being covered by healthcare insurance. This is due to several factors. Let’s unpack this using the following example:
Suppose Sizwe has a Health4Me health insurance plan with a R15,000 annual deductible. He requires surgery that costs R150,000. Initially, Sizwe must meet his deductible before insurance coverage kicks in. So, he pays the first R15,000 out-of-pocket for the surgery.
After meeting the deductible, Sizwe’s health insurance covers 80% of the remaining costs, while he’s responsible for the remaining 20% co-payment. So, Sizwe’s insurance pays R120,000 leaving him with a R30,000 co-payment.
In this common scenario, Sizwe ends up paying a total of R45,000 rand out-of-pocket despite having health insurance coverage.
These are the reasons why medical shortfall payments occur despite having health insurance or medical aid:
- Deductibles: Many health insurance plans require individuals to pay a certain amount out-of-pocket before coverage begins. This initial expense contributes to the shortfall payment.
- Out-of-pocket maximums: Although there’s a cap on how much individuals have to pay out of pocket in a given year (the out-of-pocket maximum), reaching this maximum can still result in co-payments.
- Non-covered services: In some instances, health insurance or medical aid plans may exclude certain treatments, medications, or services from coverage altogether. In these cases, individuals are responsible for the full cost.
- In-network vs. out-of-network: Using services from out-of-network medical providers can result in higher out-of-pocket expenses due to reduced coverage. Individuals might have to pay the difference between what the out-of-network provider charges and what their insurance covers.
How does gap cover assist with shortfall payments?
A gap cover policy is designed to address the discrepancy between the fees charged by healthcare providers and the coverage provided by the primary healthcare plan. It is a supplementary insurance policy that assists policyholders in reducing their out-of-pocket expenses for medical treatments that exceed the limits of their primary cover, whether this is a health insurance or medical aid plan. Typically encompassing services such as specialist consultations, surgeries and hospital stays, gap cover serves to bridge the financial disparity between healthcare provider charges and insurance coverage, providing individuals with comprehensive financial healthcare protection.
The benefits of gap cover include:
- Reduced out-of-pocket expenses: Gap helps reduce the financial burden of medical treatments by covering the difference between the primary healthcare coverage and the actual medical costs. This reduces out-of-pocket expenses, including those related to deductibles and co-payments.
- Access to better healthcare providers: With gap cover, individuals have access to a wider network of healthcare providers, including specialists and hospitals that might charge higher fees. This ensures that patients can choose the best medical care.
- Affordability: Gap cover premiums are very affordable, especially considering the potential financial benefits and peace of mind it provides.
Moreover, gap cover offers a broader scope, including services such as specialist consultations, surgeries, and hospital stays, which may not be fully covered by the primary healthcare plan. This allows individuals to focus on their health without worrying about the financial implications.
Bloom offers two types of gap cover plans to suit your needs and budget. These include:
- Gap Core is the affordable answer to unexpected medical expenses. The plan offers in-hospital coverage at affordable premiums, starting at R241 per month.
- Gap Max provides more comprehensive cover, including tariff shortfalls, upfront payments, and co-payments, starting at R278 per month.
Get Gap cover for added financial security.
Medical shortfall payments occur even with comprehensive healthcare cover due to factors like deductibles and non-covered services. Understanding these factors in your policy is crucial for individuals to anticipate and budget for their healthcare expenses effectively. Get gap cover for you and your family to ensure greater financial protection against unexpected medical expenses. Contact our offices to speak with a trained consultant to discuss your options.
