What is gap cover and why do you need it?

Gap cover is a bit of a buzzword in the financial services industry, and one that consumers might have started seeing as “gimmicky” due to its high frequency in the financial lexicon.

However, the term “gap cover” is so frequently used due to its importance as a part of your financial planning, especially as it pertains to medical aids.

What is gap cover?

Gap cover is extra cover on top of your current medical scheme, which covers the shortfall between what your medical aid pays for, and what doctors, specialists or hospitals charge. Keeping in mind that medical service providers often charge a higher amount than the amount a medical aid covers – they can, in fact, sometimes charge as much as five times the amount of what your medical aid pays – gap cover is essential to settle the difference between the bill you receive from a doctor, and what your medical scheme pays, especially if you don’t have access to capital to settle the shortfall by yourself.

Gap cover policies vary in terms of the amount that is paid out, and you’d do well to discuss the best gap cover on your current medical aid with your financial adviser.

According to recent reports by Guardrisk, Sanlam and the Council for Medical Schemes, gap cover typically pays for (but is not restricted to):

  • Some out-of-hospital procedures that used to require hospitalisation, but can now be performed in a doctor’s room. Your insurer will be able to advise what kind of procedures are covered.
  • Co-payments for certain specified hospital procedures (in full). Again, your insurer will be able to advise you here.
  • A contribution to cancer treatment costs, once your cancer benefit on your medical scheme has run out.
  • The shortfall on internal prostheses (such as a hip replacement procedure) up to a stipulated maximum.
  • A lump sum for first-time cancer diagnosis (terms and conditions usually apply).
  • Lump sum benefit for accidental death or permanent total disability.
  • Lump sum for long-term hospitalisation over a certain period of time.
  • Tooth repairs in the case of accidental injury (such as breaking a tooth in a car accident).
  • Some casualty costs (terms and conditions apply).

Gap cover may not pay for:

  • Ward costs in a hospital or step-down facility
  • Upgrades to a private room
  • Pre-admission consultation costs
  • Medication (both in-hospital and take-home)
  • External prostheses (an artificial breast or a prosthetic leg)
  • External appliances, such as wheelchairs or crutches
  • Routine medical examinations, such as ultrasounds
  • Home or private nursing
  • Extra costs related to weight/ BMI-related procedures
  • Mental health disorders, transportation costs (such as in an ambulance)
  • Out-of-hospital dental treatments
  • Cosmetic procedures
  • Costs incurred for treatment by a non-designated service provider (determined by your medical scheme)
  • Co-payments for any procedure for which you are in a waiting period

To find out what gap cover you need, taking your current medical aid into account, speak to a financial adviser at Key Wealth. We pride ourselves in being up to date with and informed of the latest developments in the financial services industry, and can advise you on all your financial planning needs.

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