Tag: healthcare costs

Mega Gap Claims Show Deep Cuts in Medical Scheme Benefits

Analysis of top 20 mega gap claims shows massive erosion of medical scheme benefits and huge cover shortfalls for members

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An analysis of the top 20 gap claims (by Rand value) paid by Sirago Underwriting Managers during 2024 highlights an alarming reality for medical scheme members – the erosion of medical scheme benefits is resulting in members facing huge financial shortfalls for in-hospital treatment not covered by their medical scheme benefits. 

Without gap cover in place, these 20 claims alone would see these medical scheme members having to collectively pay R3 million from their own pockets for in-hospital treatment. In many instances, the gap provider is paying more than the medical scheme – a complete misalignment if one considers the significant difference in premium/contribution between the two.

Gap cover is a supplementary insurance to a medical scheme benefit that covers the difference that arises from the rate that healthcare specialists charge for in-hospital procedures versus what a medical scheme pays.  

A breakdown of Sirago’s 20 mega gap claims paid in 2024 follows:

ConditionAge groupGap paid% paid by GapMedical scheme paid% paid by medical scheme
Circulatory system50-65 yearsR191 00067%R94 04233%
Blood/Neoplasm50-65 yearsR191 00039%R304 51561%
Circulatory system66-75 yearsR191 00063%R111 37337%
Musculoskeletal50-65 yearsR175 70968%R82 55332%
Musculoskeletal66-75 yearsR173 89468%R80 02032%
Blood/Neoplasm50-65 yearsR163 19871%R66 34729%
Circulatory system66-75 yearsR154 91127%R563 27073%
Circulatory system30-49 yearsR152 36064%R85 28836%
Musculoskeletal50-65 yearsR152 35030%R352 34770%
Musculoskeletal10-29 yearsR142 66047%R176 70553%
Circulatory system66-75 yearsR136 63124%R425 63176%
Musculoskeletal50-65 yearsR129 39636%R229 98564%
Circulatory system66-75 yearsR129 34064%R72 74936%
Musculoskeletal30-49 yearsR126 77182%R27 57318%
Circulatory system30-49 yearsR125 81123%R427 84877%
Circulatory system66-75 yearsR125 47943%R289 37857%
Neoplasm66-75 yearsR123 67526%R344 60474%
Circulatory system30-49 yearsR123 00122%R415 23778%
Musculoskeletal76+ yearsR121 27651%R120 23049%
Musculoskeletal50-65 yearsR119 68544%R151 36156%
Total: R2 948 38340%R4 421 05660%
  • Of these 20 gap claims, all shortfalls were in excess of R100 000, while three reached the maximum overall annual limit of R191 000 that a gap policy may cover, per member.
  • In almost half of the claims, gap cover paid more than the medical scheme paid. In one particular instance, gap cover paid R126 771 while the medical scheme paid just R27,573 – just 18% of the entire treatment bill was paid by the medical scheme.
  • Of the total healthcare cost across all 20 claims, gap covered 40% of the total cost, while medical schemes covered only 60% of the total costs for in-hospital treatment.

“These are massively concerning statistics and demonstrate just how financially devastating the shortfalls are for in-hospital treatment that medical schemes are not paying for. It is indicative of how medical scheme benefits are being eroded as schemes try to limit premium increases – members are getting less cover and lower benefit limits, despite the premium increases in their medical scheme benefit every year. Secondly, specialist fees and healthcare cost inflation is out of control and certainly not aligned with what schemes or consumers can afford. In the absence of any price regulation, and the absence of any competition as medical specialists are in short supply, things can only get worse.  Providers are free to charge any rate they wish, often many more times the rates that medical schemes reimburse at,” explains Martin Rimmer, CEO of Sirago Underwriting Managers. 

This continued acceleration of mega claims is putting the premium under pressure which inevitably will result in high premium increases every year. Sirago points to its gap claims trends over the last four years, which clearly demonstrate that being on a medical scheme option – even a comprehensive one – is no guarantee that your bills for in-hospital treatment will be paid for in full by your medical scheme.  And the shortfalls are growing rapidly in financial quantum.

“Of these 20 mega claims alone, the shortfall paid by gap cover was between R120 000 to R191 000.  These are huge numbers that very few people can afford to fork out from their savings, or go into debt for – which they would have to do if they did not have gap insurance in place. Just consider the implications for a 30-year old with a growing family to support and serious financial constraints, or a 70-year old having to fund such a cost from their retirement savings,” adds Rimmer.

Healthcare financial planning is critical

Medical scheme members will have until the end of November to make any changes to their medical scheme options which will take effect from 1 January 2025.  Given the affordability constraints, many are looking to cut back but still want access to private healthcare for any hospitalisation or serious health crisis they may face in future. Sirago advises that you work with your professional healthcare financial advisor to do the sums, take you through a comparison of the various benefit options and then devise the best plan to ensure that your healthcare needs and access to private healthcare are covered, as best possible. 

“If you’re on a medical scheme benefit, then adding gap cover to your healthcare plan is a non-negotiable if you want to protect yourself from shortfalls on in-hospital treatment and specialist charges which can be anything from a few thousand Rand, to over R190 000.  If you’re on a medical scheme option that covers 100% or 200% of tariff charged, you are going to face shortfalls when you consider that many specialists charge upwards of 500% of the medical scheme tariff. You will be liable to pay those shortfalls from your own pocket if you do not have gap cover.  Make sure to discuss this with your healthcare advisor.

“Always engage the advice and services of an accredited, skilled, and experienced healthcare broker/ advisor who will help you make informed decisions when needed most, as well as support you through the administration processes with getting your cover in place,” concludes Rimmer.