You have to go for emergency surgery that costs R90 000.
Your medical aid rate is 100%, but the cost of the procedure at your hospital is three times higher than medical aid rates.
After you’re discharged, you’re hit with a bill of R60 000 to pay out of pocket.
What do you do?
Medical aid shortfalls aren’t uncommon, but they can be pretty shocking when you didn’t see it coming.
Many of us have medical aid but we often overestimate the extent of our coverage.
And that’s where gap cover comes in. Let’s break it down.
To understand gap cover, let’s quickly go over what medical aid rates are.
Medical aid is your financial ally in the healthcare realm. But having this cover doesn’t give you access to an endless money pit to cover your healthcare costs.
The medical aid rate is the amount that your medical aid company has determined to be a reasonable charge for specific medical procedures and services. It's like a suggested retail price for healthcare.
When doctors or other healthcare practitioners charge more than the medical aid rate, you have to pay the balance between what your medical aid covers and the total fee.
Medical aids don’t just pull this information out of the sky, though. The Department of Health has published a list of recommended tariffs for specific treatments and procedures that you can receive in hospital.
This guideline is known as the Reference Price List (RPL) and its what medical aid schemes use to figure out what they’ll pay for certain things.
Medical aids in South Africa usually pay a percentage of the medical aid rate. The cap is typically a certain multiple of the medical aid rate. In simpler terms, they set a limit on how much they're willing to pay.
In many cases, medical aids pay from 100% to 300% of the medical aid rate, depending on the type of medical aid plan you have.
For instance, if your medical aid plan covers up to 200% of the medical aid rate, it means they'll pay double the amount of the specified rate for a particular procedure or service – depending on the terms of your specific plan.
More basic plans (like hospital plans or network plans) will usually cover 100% of the medical aid rate. Fancier options (i.e., comprehensive medical aid) might cover 200% to 300% of the rate.
The million-dollar question. Or, should we say, the medical aid rate question. Why, oh why, do healthcare providers sometimes charge more than what your medical aid is willing to cover?
Here's the lowdown: healthcare providers, be they doctors or specialists, often invest significant time, effort, and resources into their practices. They aim to provide top-notch care and, understandably, this comes with a cost.
Although the RPL is a great guideline, it might not always align with the economic realities of running a healthcare facility.
Some providers might also charge more to compensate for the administrative hassle of dealing with multiple medical aid schemes and the potential delays in receiving payments. This is a bit like a convenience fee for navigating the intricacies of the medical aid ecosystem.
The shortfall between medical aid rates and real costs is why gap cover has become so popular. It's a safety net for your finances, ensuring that unexpected medical expenses don't spiral out of control.
Gap cover typically costs a few hundred Rands a month and is an add-on to your existing medical aid – meaning you can’t get Gap Cover if you don’t already have medical aid.
It’s a relatively affordable product that can save you from some serious financial stress. If we go back to our original example, gap cover would cover the R60 000 shortfall on your hospital bill, instead of you needing to dig into your savings or take out a loan.
If your gap cover costs you R300 a month, that means it would have paid itself off in about a year and a half.
The point is this: We can’t choose whether we get ill or in accidents or not, but we can choose how we prepare for if (or when) it happens.
A value-rich medical aid plan with added gap cover is a sound way to do that.
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