Medical Aid, Medical Assurance and GAP – The Difference

I decided to focus on a different topic this week. What has been standing out for me lately, is the amount of people being sold policies in the health industry and it is not at all what they think it is. If you have a clear understanding of the differences of the above plans, you can plan accordingly without fear of not being covered when you need it most.
Medical Aid:
Here you have a hospital plan only or a hospital plan plus benefits known as a full medical aid. These medical aid plans are governed by the Council of Medical Schemes, have Prescribed Minimum Benefits (minimum criteria which a medical aid has to adhere to when paying out a claim) such as the Medicine Formulary list where your chronic meds get paid from or cover in an accident. Certain waiting periods can be applied if you had a break in membership as well as late joiner penalties if you haven’t been part of a South African Medical Aid from the age of 35 onwards. However, what is important here is that with a proper medical aid you will be covered for unlimited times in hospital at the medical aid tariff (normally 100% or 200%, depending on the provider and plan you choose). It covers your hospital stay and the specialists that work on you at the agreed rate. (Should your specialist charge above the rate, this could result in a shortfall, but we will get to this below.) *There are the odd medical aid companies which don’t give unlimited hospital visits, so ensure you read the terms and conditions before signing up!
GAP Cover:
This is a product we usually offer (quite adamantly so) when the client takes a Medical Aid. Usually a specialist will charge private rates if they do not have an arrangement with the medical aid. This results in the poor patient ending up with quite a large sum payable after the medical aid has settled the bill, called a shortfall as mentioned earlier. To safeguard the client, we usually urge the client to take a GAP policy with their Medical Aid.
These products and companies are governed and regulated by the Short Term Insurance Act. Maybe you have heard of talk in the industry regarding the Demarcation Rules? This was implemented to regulate these products to include minimum offerings and maximum amounts payable to members when claiming. Prior to 1 April 2017 these products were not regulated and different companies would have had different minimum rules and offerings. Now all plans MUST cover certain claims and must have certain rules and limits in place to protect the client and the provider.
Here GAP can cover the following on the top plans:
Short fall cover in-hospital for specialists
Co-payments or first amounts payable in-hospital
Certain out of hospital co-payments such as MRI and CT scans
Sub-limits for example prosthetics
Cancer shortfall cover
Casualty benefit (emergency room)
Some offer extra benefits such as funeral cover, lump sum disability cover, trauma lump sum benefits, lump sum spouse death cover etc.
This can range in premiums from R109 per month for the most basic one (just shortfall cover) to almost R350 per month per policy for top of the range cover. (Keep in mind, this is per policy for all members covered under your medical aid plan) Again, as independent advisors we are able to sift the market and see where you get the best possible value for money.
Medical Assurance:
Some products are being sold as a Medical Plan or Medical Assurance product. These Premiums are very cheap. You can either choose a hospital cover or a day to day benefit or both. The waiting periods differ and there are no late joiner penalties. These products and companies are governed by the Short Term Insurance act and not at all by the Medical Schemes Council, which means there are no minimum requirements for health pay-outs. What is important to note however, is it is NOT A MEDICAL AID, but an insurance product! It is not meant to substitute or ever replace your medical aid, but must merely be taken in addition to your medical aid plan to ensure proper cover for those unforeseen expenses (as we all know a medical aid could have some shortcomings depending on what plan you are on.) One can choose which members to add to the plan, either yourself, your whole family or just your children.
The idea is to ensure your medical cover has no gaps, however clients always want the best products, but get a fright when they see the premiums. We have to then look at need vs affordability and hopefully find a happy medium for the client. If cash flow is an issue, our advice would look something like this:
1. Firstly, one has to get a proper medical aid – whether it is just a hospital plan or whether you can afford a full plan.
2. Secondly, have a good GAP cover which has taken into consideration which Medical Aid plan you are on.
3. Lastly, one can look at a Medical assurance if your cash flow will still allow for this. It really is worth looking then at the day to day benefits which gives extra cover for GP’s visits, dental check-ups, additional X-rays and blood works, but keep in mind these are normally within their network of Dr’s and quite limited in cover.
If you are able to find a good balance between a proper Medical Aid plan, a Good GAP plan and an adequate Medical Assurance plan, you should not have any sleepless nights about unnecessary medical expenses.
Kind Regards
Lize Webb

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