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In this last article in the series on how to manage medical costs as part of your personal finances, we have to conclude by unpacking two more important products – Gap Cover and Hospital Plans.
Gap cover is a short-term insurance product designed to provide extra protection for those who already have medical aid. It should therefore be thought of as an add-on to your existing medical aid, rather than a standalone product.
Gap Cover provides additional cover to pay the deficit between your medical scheme’s tariff (MST) and the actual rates charged by private healthcare professionals.
Medical aid schemes in South Africa currently reimburse doctors and specialists at 100%, 200%, or 300% of the scheme rate. In reality, however, professional medical providers may charge up to five times the base tariff.
By subscribing to gap cover, you protect yourself and your family against this financial disparity, potentially avoiding significant out-of-pocket medical expenses.
Hospital plans, however, are a type of risk-based insurance coverage, and monthly premiums ensure that in case of an emergency admission or the need for hospitalisation, you are covered.
While medical aids and insurance companies can both offer hospital plans, those offered by insurance companies are not regulated by the Medical Schemes Act and are considered financial products.