There is widespread misconceptions regarding different medical aid related financial products and hospital cash back plans. The confusion largely arises from the terms hospital plan and hospital cover which have become blanket terms to relate to any and every one of these products. Gap cover for medical aid is one of the newer products on the market. It is important for medical aid members to fully understand the benefits offered by gap cover and how it differs from a hospital cash back plan.
Medical Aid Gap Cover
Quite simple, medical aid gap cover pays the difference between the medical aid tariffs and the doctor’s professional fee. The medical aid tariff is the set of fees that a medical aid will pay for certain health care services and products. This is in line with the NHRPL (National Health Reference Price List) set in conjunction with the South African Department of Health. However, the NHRPL is just a guide and doctor’s and other health care service providers can charge more or less, as they wish.
Payout by Gap Cover
These days many medical specialists charge fees at a higher rate than the NHRPL usually for in-hospital visits and procedures. While many medical aids have tried to cater for these at times exorbitant fees by paying a higher fee in hospital cases, it may not be enough to meet with the provider’s demands. Medical aid gap cover protects the patient by paying the difference between the medical aid’s payout and the doctor’s demands.
Naturally there is some limitations to the payout of the medical aid gap cover but it largely saves the patient from paying out from their own pocket, above and beyond the doctor’s demands. Therefore medical aid should be seen as a useful adjunct to traditional medical aid for one’s health care costs. No doubt this is necessary for any South African on medical aid as private health care costs in the country are high, to say the least.
Gap cover is not a new concept. It has existed in some form or the other for many financial products including short term insurance like car insurance. However, medical aid gap cover has come more into the spotlight in resent years as more doctors, particularly medical specialists, have started demanding higher rates above the NHRPL.
Gap Cover vs Hospital Cover
Hospital cover, in this case referring to hospital cash back plans, are a different financial product from medical aid gap cover. At first it may sound similar but is not. Hospital cover pays out a preset daily amount for each day that a person is in hospital. It does not matter if that person has medical aid cover or not. This hospital cash back payout is made directly to the person and is not a form of medical reimbursement directly to the doctor or hospital. Of course a person can use the payout to settle the outstanding medical bills if they so wish.
Hospital cover cannot replace medical aid
It is never advisable to “hide” behind a hospital cover to fund your health care bills. As is repeatedly stated, a hospital cash back plan is not a medical aid. In serious cases requiring hospitalisation, the payout from hospital cover will never meet the cost of medical care even when the payout is as high as R5,000 per day. Consider the fact that within 10 days of hospitalisation for a heart attack, the total bill can be between R150,000 to R200,000.
Advantages of both products
Hospital cover is nevertheless a useful product. It financially protects a person in their personal capacity when they are hospitalised and cannot work. It put cash in their hand which can be spent as they wish and when they choose to do so. Gap cover on the other hand is solely for medical expenses and is simply a top up for the shortfall between medical aid payout and the doctor’s demands. In this regard, both medical aid gap cover and hospital cash back plans have their respective roles and where possible, both should be purchased for maximum financial protection.