Medical-cover shortfalls make gap cover a ‘must have’

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Gap cover – an insurance product that pays for in-hospital costs not covered by medical aid schemes – has become a ‘must have’ to reduce the impacts of co-payments and shortfalls in payment for medical treatment.

This is the warning from specialist healthcare insurance and medical-aid brokers, who say that gap cover bridges the gap between what medical schemes cover and what medical practitioners actually charge.

This gap is set to widen, as medical practitioners increase costs. Specialists typically charge 200-300%, but some charge as much as 600%, or more, of the medical-scheme tariffs.

This comes amid a low-to-zero South African household savings rate and a rising cost of living, in which most families are not able to manage any large unexpected financial expenses without putting themselves in debt.

Rising medical costs

Tiago de Carvalho, chief executive officer at Ambledown, says this growing gap exposes patients to substantial financial risk. “In 2025, our analysis shows medical providers will likely increase tariffs by 6% to 8.5%. The rising complexity of surgical interventions and multiple procedures for the same condition have sharply increased costs,” he says.

Westley van Rooijen, co-founding partner at Austen Morris Associates, says: “We went through medical-aid plan renewals, and saw some schemes marginally increasing rates but reducing certain benefits. Others increased scheme contributions by between 9 and 12%.”

As medical schemes increase contributions, many cash-strapped consumers choose to downgrade to less expensive plans – with less cover.

Devan Moodley, regional manager at Healthcare at NMG Benefits, notes: “Appropriate medical-scheme coverage should ideally be determined by a detailed needs analysis. However, in most cases, it’s primarily driven by cost which often serves as the main obstacle to access.

"While gap cover is recommended regardless of the option you select, the gaps on more affordable basic plans tend to be more significant. As a result, gap cover becomes crucial.”

Covering biological cancer treatment

The brokers say that without gap cover, patients and their families can find themselves in deep financial trouble when illness or accidents occur.

A key concern is the potentially high costs of cancer treatment, Moodley says. The incidence of cancer is increasing, even among younger people, and certain cancer treatments requiring biological drugs and specialised cancer medication are very costly.

“These new treatments can be life saving, but the medical schemes either don't cover them at all or they give patients huge co-payments,” Moodley says.

Van Rooijen says: “If an aggressive treatment plan is recommended, with specialised, designer biological drugs, patients can reach their 12-month cycle limit in as little as four months.

Case 1: Funding gap for oncology medication

"One of my clients, confronted with a 20% shortfall on her drugs, which cost R45,000 a month, was deeply concerned about the impact these costs would have on her children’s school fees. She was afraid she would have to take loans to continue her treatment. However, her Ambledown Select Gap Cover is covering the shortfall and saving the family from financial ruin.

“The bills associated with cancer treatment pile up. Typically, most people with cancer go over their medical-aid limits – with the exception of breast cancer if it is caught early. Extreme stage 4 cancer exceeds medical-aid limits all the time,” he says

Zanele Matipwili, head of Sasfin Health Consulting, says her organisation has also noticed an increase in gap claims for cancer co-payments. “This is the co-payment applicable once the oncology benefit threshold is reached. Depending on the oncology treatment that the member is on, the claims can range from R3,000 to R23,000 per cycle,” she says.

Covering the costs of planned procedures

However, dread disease is not the only cause of unexpectedly high medical costs.

Moodley cites the example of a young woman who had four children in six years, and who calculated that she would have been liable for a total of over R100,000 in that time, had she not had gap cover.

“There are many similar examples where planned births rack up huge unexpected costs because medical schemes don’t cover all the costs,” he says.

“We are also seeing an increase in the number of back and neck procedures that were deferred during Covid, with higher costs and larger payment gaps than in the past.”

Matipwili highlights examples of how gap cover assisted clients: “One member faced a challenging year, battling multiple medical conditions, including kidney stones, a joint replacement and a heart condition, all within a 12-month period.

"Initially, he was frustrated because his medical aid wasn’t covering all his claims. He forgot that he had gap cover and assumed the medical aid should be covering everything.

“After reviewing his medical-aid claims history, I discovered he could claim for co-payments on CT scans, scopes, and in-hospital shortfalls. Thanks to his gap cover, he was able to recover R21,100 in out-of-pocket medical expenses. Although some claims were unfortunately rejected due to late submission, he still managed to recover a significant portion of his expenses,” she says.

Case 2: Cover deficit for a hernia procedure

Matipwili adds, “In another case, a member underwent surgery for an umbilical hernia. Between the specialist surgeon and the anaesthetist, who both charged 400% above the medical-scheme rate, the member faced a shortfall of R10,940. Fortunately, he was able to claim this shortfall through his gap cover, avoiding a substantial out-of-pocket expense.”

Van Rooijen points out: “People are living longer now, and may need age-related treatment like joint replacements. But because of the high costs, many of them are opting not to undergo the procedure and just manage the pain instead.”

He says prostheses such as replacement hips can cost as much as R80,000, which is not always covered by medical schemes. Depending on the gap cover selected, the shortfalls in payment for prosthetics and procedures may be covered.

Choosing the right cover

However, choosing the right gap cover to address shortfalls in medical schemes can be challenging. The brokers note that with over 200 medical-scheme plans and gap-cover products in the market, individuals need expert advice to find the right combination of medical scheme and gap cover to meet their needs, within their budget.

Van Rooijen says: “You need a broker with expertise to help dissect the medical-aid options, find shortfalls and identify areas that need top-ups with gap cover, and balance these with the individual’s budget.”

Moodley says: “With so many plans and permutations, it's not easy for people. Medical schemes and gap cover are not one-size-fits-all products – it has become more complex.

For example, when people retire they may find they can’t afford their current medical-aid costs when they no longer have an income. We help by looking at more cost-effective plans to give them some level of cover, balancing their budget and needs.

Matipwili adds: “It’s essential that brokers educate members on an important distinction: while having unlimited hospital cover on medical aid is beneficial, it does not guarantee that all in-hospital medical expenses will be fully covered.”

She says many specialists charge above the medical-scheme rates, and medical schemes are increasingly introducing co-payments, which can leave members with unexpected out-of-pocket expenses. These co-payments, along with additional costs that may arise during treatment, can add up quickly, leaving members financially exposed.

“This is where gap cover becomes crucial. By having gap cover in place, members can protect themselves against these unforeseen medical expenses, ensuring they are fully covered even when their medical aid doesn't cover the full cost.

"In an environment where medical costs are rising and medical schemes are reducing benefits, gap cover provides peace of mind and financial security,” concludes Matipwili.

Gap cover is not a medical scheme, and the cover is not the same as that of a medical scheme. Gap cover is not a substitute for medical-scheme membership.