Although they are two different financial products, there is still much confusion about medical aid gap cover and a hospital cash plan. Both provide financial protection in terms of medical bills but in different ways. Ideally you should have both types of cover if you can afford it, as well as medical aid, but none of these products can replace another. Here are the three ways that these different financial products protect you :
- Medical aid protects you against the high costs of private healthcare in South Africa.
- Gap cover protects you against the shortfalls from what your medical aid pays and what your doctor charges.
- Hospital cash plans protect you against the financial loss of being hospitalised.
What is medical aid gap cover?
Medical aid gap cover pays for your medical expenses above the scheme payout. Tariffs for medical services are paid according to the National Health Reference Price List (NHRPL). However, some doctors and other healthcare practitioners charge above and beyond the NHRPL rate. While your medical aid will only pay the NHRPL rate, gap cover will pay the difference. So if your medical aid paid 100% of the NHRPL rate but your doctor charged 300% of the NHRPL rate, gap cover will pay the 200% which your medical did not pay.
These days gap cover is seen as an essential policy because many doctors in South Africa, particularly medical specialists, charge private rates which are well above the NHRPL rate. Without gap cover, you would have to reimburse the doctor out of your own pocket for the difference. Fortunately some medical aid plans pay higher than the NHRPL rate for certain services in hospital but gap cover also protects you for higher than expected costs for some outpatient services.
What is a hospital cash plan?
A hospital cash back plan is an entirely different insurance policy. It pays you the patient cash for each day that you are in hospital. There is a deferred period of about 2 days which means that you have to be in hospital for two or more days before you can claim. Some hospital cash plans have a 3 day deferred period. With the payout from a hospital cash plan, you can use the money for whatever you desire. You can use it to pay your outstanding medical bills or use it for personal expenses. It is your choice.
A hospital cash plan pays you a predetermined amount per day in hospital. This payout may not be enough to pay for the shortfall in medical aid reimbursement. This is where a gap cover is needed. However, a gap cover does not put cash in your hand in the same way as a hospital cash plan. Despite the confusion among consumers, a medical aid gap cover and hospital cash plan are not the same or similar policy. Each has its distinct benefits over the other. Both are considered essential in the current economic environment within South Africa.