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Mediclinic News : Medical Insurance: It’s easier to take the gap now


Medical Insurance: It’s easier to take the gap now




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FINANCIAL MAIL The policies have their place, as some specialists in hospitals charge more than 500% of medical scheme rates The business of gap cover, which takes care of shortfalls in medical aid payments, was once seen as a rogue industry. It was deemed to encourage medical practitioners and hospitals to charge more, knowing that they would be reimbursed. It was also dressed up as a cheaper alternative to medical aid, even though it can never provide the cover needed in a serious health event. These days nobody is allowed to buy gap cover unless they are already a member of a registered medical aid. It is not surprising that the industry was dominated by church mouse-sized businesses such as Stratum, TRA, Turnberry and Zestlife. The most mainstream business was Admed, part of Guardrisk, now owned by MMI. But it seems as if Admed spent more time fighting the regulator in court than servicing its clients. The big life offices such as Old Mutual and Sanlam had gap cover products on their shelves, but they were gathering dust. However, the controversy is over — at least until the introduction of National Health Insurance reopens the debate. The industry has agreed to limit the annual payouts to R150,000 per person. This applies to all policies written after April 1. Feroza Joosub, head of Sanlam Gap Cover, says it has never processed a claim as high as this. In fact, the average claim amount in a year is R8,000 - R10,000. But gap cover still has a role: some specialists in hospital charge more than 500% of medical scheme rates. It won’t be plain sailing for the gap cover providers. Discovery, which has a 40% market share of the medical aid market, is introducing its own gap cover. As is its practice, it offers a complex menu of options. Discovery Life CEO Hylton Kallner says the health business as well as the life and short-term insurers in the group, have collaborated. There is a picture of the options that looks like a Rubik’s cube. The core option is the in-hospital specialist gap cover, which pays up to 200% of the medical scheme rate. But as well as its supplementary range, it also has two extenders: hospital admission benefit, which gives R20,000 extra cover, and the oncology benefit extender, which provides up to R100,000/year on cancer-related claims. Cancer is an increasingly important area of coverage, as medical aids very rarely cover expensive but life-prolonging cancer drugs such as Herceptin and Avastin in full. Under the new regulations gap cover providers have to be fully transparent. Among the Turnberry options, those without cancer cover are available, but at a saving of barely R60/month. Kallner says Discovery gap cover will be available only on the flagship Discovery Health Medical Scheme and a few selected closed schemes run by Discovery. "We need to make it a seamless process for which we need full information. And it will be convenient for our clients to forward the bill to one place." Discovery goes further than in-hospital costs, covering rehabilitation and take-home medicine. Kallner says genetic testing and home care could also be paid for. And its supplementary gap cover is similar to dread disease cover, which offers lump sums in diagnosis of a serious illness, including cancer. Kallner says the group needs to protect itself from clients buying down. There will be a two-year waiting period for clients who buy down from Executive and Classic to cheaper plans such as Essential and Coastal. The gap cover businesses protect themselves from what insurers call "antiselection", or the taking out of policies when one knows you will profit from them. All gap cover businesses have a three-month general waiting period and a predictable nine-month waiting period for maternity benefits. Some have a 12-month waiting period on all pre-existing conditions; others might impose that for certain prescribed procedures such as tonsillectomies and colonoscopies — not that anyone’s in a hurry to have those. Sanlam has gone in a different direction from Discovery, with a very simple one-product offering. Joosub says the lower-cost Standard product has been discontinued as it was not popular. The premium was only marginally less than for the comprehensive product but the benefits were far more limited. Comprehensive still has exclusions such as specialist dentistry, obesity treatment, cosmetic surgery (unless genuinely reconstructive) and claims older than six months. The gap cover rules discriminate against single people, though Discovery is more flexible. In Sanlam Comprehensive, for example, as long as everyone in the family is under 60, all the members are covered for R198/month — this increases to R400/month if there is a family member over 60. But a single person will pay the same amount. But even a single person who expects to need a top-up of R2,500 or more on medical costs in a year would benefit from a gap cover product. And least now that there is regulatory certainty these products can be marketed openly and not in the shadows.
Created at 2017/05/03 04:48 PM by Mediclinic
Last modified at 2017/05/03 04:48 PM by Mediclinic