Medical aid is the lifeline that allows most people in South Africa to access private health care services. Probably the most expensive of these services is in-hospital expenses and at the very least a medical aid hospital plan only is seen as a necessity if a person does not want to opt for a government facility. However, medical aids do not guarantee unlimited payment at exorbitant rates. Instead medical aids pay according to the National Health Reference Price List (NHRPL) rates and up to a predetermined benefit limit. So what happens if you medical aid payout falls short of rates that your doctor is demanding? Previously you would have to pay the difference from your own pocket but these days there is a top up cover which will settle the bill.
Medical Aid Gap Cover
Medical aid gap cover is an insurance policy that covers you for the difference that your medical aid pays and what your doctor bills you. These days many doctors, and medical specialists in particular, charge very high rates. These rates are above and beyond the National Health Reference Price List (NHRPL) and are referred to as private rates. Although the doctor may set his or her own rate as an individual, it is usually in line with the recommendations of professional organisations like the South African Medical Association (SAMA).
These private rates are also known as SAMA rates (previously MASA rates) and are higher than the NHRPL rates set by the Council of Medical Schemes and Department of Health. Without gap cover, the difference between NHRPL and private rates can leave a person heavily in debt especially after a long hospital stay requiring specialist care.
How much does gap cover pay out?
The payment rate for medical aid gap cover depends on the level of cover that a person buys. Gap cover is an optional extra that can be purchased from many insurance companies in South Africa, should your medical aid not offer such a policy. It starts from around R100 per month. Depending on the level of cover, medical aid gap cover will pay the difference between 100% to 400% of the NHRPL. For example, if your doctor charges R3,000 for his/her services but the medical aid only pays out R1,000 (100% of NHRPL), then the gap cover will pays the other R2,000 (200% of NHRPL). It only covers legitimate medical expenses.
Hospital Plans that Pay Private Rates
Some medical aids have hospital plans which pay out higher than NHRPL rate. These plans can pay anywhere from 150% to 300% of NHRPL. This means that you hospital plan would pay up to 3 times the NHRPL rate for medical expenses incurred while you were in hospital. In these cases you may not need gap cover to top up for your medical aid’s shortfall. However, hospital plans that pay private rates are usually more expensive and not offered across the board on all plans offered by a medical scheme.
Normally, if you doctor charges a rate well above NHRPL, then either you as the member or the doctor would be directly paid only the NHRPL rate. The doctor would then claim the difference from yo in cash or you would have to face debt collection. However, gap cover and hospital plans that pay private rates have eliminated this potential financial pitfall that patients may face after being discharged from hospital.
Top Up with Cash Plans
Hospital cash back plans have become a popular insurance policy in South Africa and are quite aggressively marketed for its benefits as top up cover in the event of hospitalisation. However, a hospital cash back plan is not the same as medical aid gap cover. Hospital cash cover pays out a flat rate per day that is stipulated at the outset. This can be as high as R5,000 per day. It pays you cash for every day that you are in hospital and you can use the money that you receive as you wish. You can use it for personal expenses or top up on your outstanding medical bills. While the flexibility in these plans are great, it can fall short if you intend to use it as top up cover.
Medical aid gap cover pays out according to NHRPL. Hospital cash back plans do not. So you could be in hospital for just a few days but the payout from your hospital cash back plan may not be sufficient to cover up the shortfall in your medical aid payout. In addition, these hospital cash benefits only start paying after you have been in hospital for 2 to 3 days, which is known as a deferred period. Imagine if you went in for what is considered to be a minor procedure. You may be out of hospital within a day or two but even though it was a minor procedure it does not mean that you will not be faced with a “major” bill. A hospital cash back plan will not pay out for such a short hospital stay but medical aid gap cover will payout in the event of a shortfall.