July 22,2024

Understanding the Limitations of Medical Gap Insurance for South African Consumers

South African consumers often misunderstand the scope of medical gap insurance, erroneously believing it will cover every medical aid shortfall.

In the latest report from the Ombudsman for Short-Term Insurance (OTSI), Assistant Ombudsman Zuleckha Cara highlighted that many consumers mistakenly assume medical gap insurance will cover any shortfall not addressed by their comprehensive medical aid.

It's crucial to understand that gap cover, like any insurance policy, comes with terms and conditions, meaning there are situations where the insurer will not cover the shortfall.

One case involved an insured individual who submitted a claim to his medical gap cover provider for amounts owed to his medical practitioner after a cardiovascular-related procedure. The insured believed the insurer must honor the contract, as they had advertised coverage for any doctor's shortfall.

However, the insurer rejected the claim, stating the procedure codes in question were excluded from the cover. Cara explained that these codes fell under Prescribed Minimum Benefits (PMBs), which are costs the comprehensive medical aid policy should cover in full.

The insured sought relief, asking the insurer to cover the shortfall not paid by the medical aid scheme. During the investigation, it was revealed that while the policy initially covered PMBs, it had been amended before the claim. The insured had been explicitly informed that PMB-related treatments would no longer be covered due to changes in the Medical Schemes Act regulations, which mandate that all medical schemes pay the full costs of diagnoses, treatments, and care for PMBs.

PMBs are defined as "a set of benefits as defined in the Medical Schemes Act 131 of 1998 with Regulations, which ensure all Scheme members have access to certain minimum health benefits, regardless of their Medical Scheme option."

The Ombudsman's office concluded that the insured could not expect the insurer to provide cover beyond what the law permitted, and the complaint was not upheld.

"There are policy exclusions where medical gap insurance will not provide cover if the comprehensive medical aid scheme does not fully pay for a procedure or treatment, or if the insured failed to follow the medical scheme's rules," Cara noted.

Consumers are advised to discuss their specific needs with financial service providers to find the best combination of medical aid and medical gap cover to meet their needs.