MONEY CLINIC | What is medical gap coverage and how does it work?
An important point to note is that gap coverage does not replace medical aid, so one cannot take the lowest tier medical aid coverage and expect gap coverage to cover any financial loss.
So you have a medical insurance policy, and although it may cover you for certain medical possibilities, it is also possible that it may not. This is where gap coverage comes in.
According to Michael Emery, marketing manager at Ambledown Financial Services, “it is intended to supplement medical aid coverage, to cover the gap between what is billed and what medical aid pays”.
But what is gap hedging? Emery explains.
“Gap Cover is not a substitute for Medical Aid; you are not eligible for Gap Cover if no benefit is provided by Medical Aid under that specific plan – this is not a substitute for medical aid but a complementary product If your medical aid coverage excludes a specific treatment, your gap coverage will not cover it either.
“Instead, if your medical aid covers 100% of the tariff while treatment is billed at 200%, your gap cover will pay the difference.”
Understand the difference between outpatient care and inpatient care
Once you understand the basic principle of gap coverage and why it’s so necessary, it’s important to dig into the details of how the two work together. It is essential to understand the difference between casualty care and emergency care.
A person presenting to the emergency unit will either be treated on an outpatient basis or deemed to require immediate hospital care and admitted.
When a person is taken care of on an outpatient basis in the emergency or traumatology sector of the hospital, his medical expenses are covered by medical aid if it is a benefit, and the balance of what is not supported can be claimed under gap coverage (depending on your gap coverage plan).
Emergency care in hospital
In contrast, an emergency is characterized as the sudden and unexpected onset of a medical condition and is diagnosed as requiring immediate attention by the attending physician. If the patient is then admitted, he will be covered by his hospitalization medical cover.
As with the treatment of outpatients, do not assume that your medical aid and hospitalization plan covers you completely. Again, the actual fees for specialists can be much higher than medical plan benefits, and gap coverage can be used to make up the shortfall.
Your hospital medical assistance plan will cover you for the amount indicated by your plan. If a specialist charges 300% of the medical plan rate and treats you while you are hospitalized, and your medical coverage only includes 100% coverage, you will be responsible for the balance. And that can add up to a significant amount, depending on how long you stay in hospital and the treatment required – the specialist will usually see you once a day or more. Gap cover can cover the balance of what is not covered and is still due to the specialist.
Very often, after serious illness and a long hospital stay, patients without gap coverage find themselves out of pocket when a big bill comes in from the specialists, on top of the medical plan tariff.
Another area where gap coverage is poorly understood is hospital choice. The medical aid plan will usually specify which hospitals should be used – this is a measure to reduce high costs. If out-of-network hospitals are used, Medical Aid will reject any charges above its tariff and may impose a co-pay penalty. In such cases, you should check your gap coverage, as your policy may or may not cover these costs or may provide you with partial coverage.
It is also important to note that consultations with specialists who have rooms in the hospital would not fall under the inpatient treatment regime. In the event of non-emergency specialist care, during hospitalization, the medical plan would pay its tariff, and the patient would be responsible for the loss of earnings, for which a claim for gap cover can be made.
A final point to note is that it is impossible for a gap coverage provider to calculate in advance the costs of a treatment and what the patient will be responsible for. This is because gap coverage will only be calculated once all bills have been submitted to medical aid and they have determined liability.
As for specialists, remember that gap coverage will only cover their coverage limits to the maximum (most being 600% of the medical plan rate, minus the amount paid by medical aid).
Gaps coverage should be an integral part of your medical risk mitigation strategy. It’s worth spending some time to understand exactly how it works. Note that gap coverage is designed to cover inpatient treatments and procedures and certain defined outpatient treatments and procedures (such as chemotherapy and radiotherapy for the treatment of cancer, certain endoscopes and scanners). Gap coverage policies are not designed to cover shortfalls and daily expenses after your medical savings account has been depleted.
Questions may be edited for brevity and clarity.