Greetings from Trevor Taylor, Managing Director at Chartered Employee Benefits. This months blog post deals with the topical issue of covering healthcare expenses that Medical Aid Schemes do not cover.
Devlin Ross, our Healthcare Specialist at Chartered Employee Benefits, was recently interviewed by Moneyweb on the subject of Gap Cover. Given current concerns about the quality of healthcare generally, the subject of Gap Cover is certainly one worth exploring.
Are any out-of-hospital procedures covered with gap cover? If not, is this a future possibility?
Generally, no, but most offer a casualty benefit. The cost of a casualty account is considered an out-of-hospital expense if the patient is not admitted to the hospital.
Any other restrictions with gap cover?
There is waiting period applied to members: this may range from a 3-month general waiting period during which a member cannot claim at all for said 3 months, to a 12-month condition-specific waiting period (recently amended after the final draft of the demarcation regulation was published), during which a member cannot claim for a specific medical procedure or procedures related to a specific medical condition.
Who should take out gap cover? Why?
Members of a medical scheme. Gap cover adds to a medical scheme in-hospital benefit. Specialists’ fees are not regulated in South Africa and this has resulted in medical schemes creating a cap on the percentage of cover they will fund; for example, a medical scheme will have its own rand value rate for a specific procedure like a specialist consultation in the hospital. This amount is more or less R450. We know that most specialists charge more than this amount, often double the amount.
The medical schemes plan will determine the benefit in respect of the percentage of cover. Some plans will offer 100% or 1 times their rate and other more expensive plans will cover 200% or 2 times their rate. There is no medical scheme at the moment that exceeds 300% or 3 times their medical aid rate and only the top, most expensive, plans offer 300% or 3 times their medical aid rate.
Is it just a money-making scheme created by the inefficient cover by traditional medical aid schemes?
No, medical schemes do not benefit from gap cover (quite the opposite, actually). Members of the medical scheme benefit from gap cover, and this is owing to, in my opinion, the inefficiencies in our ability to legislate the private sector.
Is gap cover extremely specific regarding ailments and scope?
Gap cover aligns itself with the benefits of a medical scheme and therefore bases its cover on the benefit of a medical scheme.
What are the benefits and downsides?
The benefits are significant savings in the ever-increasing cost of medical treatment and due to the lack of the above-mentioned legislation, they have little or no recourse in respect of recouping costs. The downside is that of most insurance policies: if you never claim you never get your premiums back.
What do members look for when selecting gap cover?
Look for 500% or 5 times medical aid rates of cover. Another benefit overlooked by most is the co-payment benefit; this is a key benefit as most if not all medical schemes use co-payments when members are admitted to the hospital. In any new policy, members MUST read and understand the benefits and conditions of said policy.
Any trends in the demographics of people who have gap cover?
The only trend at the moment is an increase in the number of people who want to join and the utilisation by existing members as they become more familiar with the product and its value.
Has the growth in gap cover been curtailed somewhat by recent caps on shortfall benefits?
It is still too early to tell as this only came into effect from 1 April 2017. However, most gap cover providers have stated that members’ claims very rarely, if ever, exceed the new limits determined in the regulations. The regulation allows for any members who joined a gap cover provider before 1 April 2017 still to have an unlimited benefit.
These policies will align with legislation from 1 January 2018. Any new policies entered into from 1 April 2017 will be subject to the annual limit of R150 000 per person on the policy.
Any current products covering
day-to-day self-payment gaps for medical scheme members (out-of-hospital claims)?
No
What would be needed for such a product?
A lot of research. A current gap cover policy works on the risk principle whereby a member may never claim. The insurer can thus benefit from cross-subsidisation. It is almost inevitable that member will reach their self-payment gap and may even be encouraged to do so if they have such a product.
Is development of such products limited by CMS demarcation regulations?
This will depend on the insurance category under which this product will fall.
Is there a need for such a product?
Very much so.
How can members best manage their medical scheme plans to avoid or deal with self-payment gaps?
By understanding how self-payment gaps are managed by their respective medical schemes. An independent medical scheme advisor should be consulted given their level of expertise in this matter.
What can be done to curtail doctors and specialists charging above medical aid rates?
Absolutely. The best way to help reduce these costs is to talk to your doctor and negotiate pricing with him or her. Doctors will often reduce their fees if you offer to pay cash; you can then claim back from your medical scheme.
Some doctors contract with the medical scheme and agree not to charge above the specified rates – this should also be discussed with the doctors performing the procedure. The member should also make an effort to understand prescribed minimum benefits. This is a set of 290 conditions for which medical schemes are required to cover the cost of treatment, but are, however, permitted by the Medical Schemes Act to enforce the use of contracted or network doctors.
What is the outlook for gap cover products in the near future?
Based on the changes in legislation and the increase in utilisation we will definitely see hefty increases in premiums in the years to come.
Anything else to add on gap cover?
Although gap cover is a relatively simple concept, the scheme to which the cover attaches can be incredibly complex. It will always be in the best interest of the member to consult an expert in the relevant field for advice.