Updated 05 August 2013

End of gap cover and hospital insurance?

There are big changes afoot in the world of medical insurance: if you have a medical gap cover policy, a top-up policy or hospital insurance, you need to read this.

nd of gap cover and hospital insurance?

There are changes afoot in the world of medical insurance: if you have a medical gap cover policy, a top-up policy or hospital insurance, you need to read this.


10  Q&A on the proposed changes

Why is gap cover and hospital insurance in the news at the moment?

An Amendment Bill, which proposes to make drastic changes to several healthcare products that are not registered as medical schemes, has been released.


Which products might be affected?

Three products are affected:

  • Gap cover (pays the difference between medical scheme payments and private specialists' fees)
  • Top-up cover (covers co-payments and payments after scheme benefits have been exhausted)
  • Hospital cash plans (pays out a set amount for each day you spend in hospital)


Why do people have gap cover?

Medical schemes, especially the lower-cost options, often don't pay specialists' fees in full and members are trying to protect themselves from huge co-payments. Many scheme members who have top-up cover would be unable to pay the higher premiums on more expensive options within their medical schemes in order to have specialists' fees paid up to 200% of the medical scheme rate.


Why do people have top-up cover?

Top-up cover protects member against huge costs once their scheme benefits have been exhausted. Top-up cover is generally much cheaper than opting for a more comprehensive medical scheme plan.


Why do people have hospital cash plans?

Many people who have hospital cash plans cannot afford high medical scheme contributions. Hospital cash plans are much cheaper than full medical schemes or hospital plans, even though they generally don't cover hospital costs. Schemes pay your medical bills, insurance plans pay you per day you spend in hospital, regardless of the treatment or the procedures.


Why is the Treasury considering these changes?

If young and healthy people increasingly go for cheaper medical cover, it will increase the price of cover for old and sick people, the National Treasury says. The only people who will be paying into the risk pool, will be high claimers.


How do the medical insurance companies feel about these proposed changes?

The insurers say these proposed regulations will leave poorer people without health cover and will increase medical costs of scheme members. They say they will resort to legal action if necessary to protect people's rights to use affordable products to protect themselves against high medical expenses, as reported on IOL.


Will any medical insurance plans be allowed under the proposed legislation?

Yes, but only income-protection cover, covering up to 70% of your daily income for the time you are in hospital.


Is this final?

No, the Registrar of Medical Schemes still has to decide whether these add-on products and insurance policies really do undermine the health of medical schemes. If this is taken to court, it may be quite a while before any of could becomes law.

What happens if I have one of these policies?

If the legislation is passed, you will not be allowed to renew your policy once its term has expired.

(Compiled by Susan Erasmus, Health24, March 2012)

(Pic: iStock)

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