Although gap cover has been around since the late 90’s, the demand for this type of cover has increased significantly over the last few years as medical aid members’ appreciation of the importance of gap cover has grown.
Gap cover is an integral component of financial advisors’ health planning for clients; so much so that many financial planners will tell you that they do not sell medical aid without gap cover.
Gap cover is a non-life insurance product that clients can purchase together with their medical aid to protect them from potential shortfalls when going into hospital or ungergoing procedures at a day clinic. While this cover is a vital benefit that can save policyholders from incurring large shortfalls, it is important to note that gap cover has its limitations.
“One of the biggest problems insurance companies face, and with gap cover it is no different, is to get policyholders to understand their benefits. Policyholders often think that gap cover is a catch-all benefit, and any expenses that are not covered by the medical scheme should automatically be covered by gap,” says Lindie De Gouveia, Executive: Admed at Guardrisk.
Education is key and, while the financial advisor has the obligation to explain the product properly, there is also a responsibility for policyholders to ensure that they take the time to read through the policy documents to understand their benefits.
When it comes to gap cover, price and benefits are the two most important factors. Policyholders want the right gap cover but also at a price that is affordable.
De Gouveia says that cost-saving mechanisms help to maintin the delicate balance of price versus benefits in an extremely competitive market. She cites the example of MedClaim Assist, a third-party provider that negotiates with medical schemes on Admed’s behalf, specifically around Prescribed Minimum Benefits (PMB). Legislation dictates that all medical schemes, are obligated to pay PMB’ claims in full.
"We realised that in certain instances, medical schemes were not applying the PMB rules to certain claims, and the costs for these PMB shortfalls were being passed onto the gap insurer,” says De Gouveia.
“In the past, when our system picked up a PMB claim, we approached our policyholders to provide confirmation from their medical schemes that the claim was processed correctly and that the PMB rules were applied. This process was not ideal and often put the member in a tug of war between the gap insurer and the medical scheme.
“MedClaim Assist, now steps in and negotiates with the medical scheme, ensuring that they fulfil their obligation to pay PMB in full or, at least, reducing the shortfall for the member. If MedClaim Assist’s intervention is not successful, the claim is sent back to Admed so that the shortfall is processed as a normal claim within Admed’s policy conditions.”
MedClaim Assist also negotiates directly with service providers to reduce the amount they have charged by offering them immediate payment. Savings realised by MedClaim Assist’s intervention are passed onto Admed policyholders in the form of lower premium increases and better benefits.
Choosing the right gap cover has become a minefield for financial planners and their clients, as there are many gap cover providers in the market, each offering a number of options within their products. It is important that financial advisers do their homework so that they are able to offer their clients options from a reputable provider with a proven track record that gives the best benefits for the correct price.