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Medical expenses and pay outs – Is the gap widening?

In a recent opinion piece written by Tony Singleton, CEO of Turnberry Management Risk Solutions, he questions if the ‘gap’ has grown between medical expenses and payouts. Singleton mentions that over the past few years, medical inflation has outstripped the inflation of Medical Aid premiums, resulting in year on year increases in medical expenses shortfalls and co-payments.

“Gap Cover providers are now paying out more than medical aids in certain instances. Moreover, Gap Cover is an essential component of any financial portfolio to protect you against potentially crippling medical expense shortfalls”, he states. According to Singleton, the situation is only going to worsen, which means you simply cannot afford to be without Gap Cover anymore. As a result, financial planning for medical needs is essential and the best solution is to enlist the assistance of a financial advisor.

Singleton confirms his thinking with real-life examples:

  • Childbirth is one area where we are seeing frequent and large Gap Cover claims. In one instance we have seen a claim where the provider charged 7.95 times the Medical Aid rate. The gynaecologist claimed R30 405 for a Caesarean section, and medical aid paid just R3 825. Gap Cover paid out to the maximum amount possible, a sum of R15 303, significantly reducing the burden on the new parents.
  • Cancer is often a sudden and unexpected diagnosis, and the medical expense shortfalls for cancer care can be significant. We have seen a case of a breast cancer survivor who experienced a medical expense shortfall of R49 186 which was paid by her Gap Cover.
  • Accidents are also something that can result in large out of pocket payments. For example, a mountain biking enthusiast suffered an unfortunate accident on a trail. MRIs and other tests showed severe cracks in his C7 vertebrae and damage to the surrounding nerves. He was then referred to a neurosurgeon for urgent surgery on his cervical spine. With his Medical Aid implementing co-payments and other restrictions on his cover, the total medical expense shortfall was R54 470, which was covered by his Gap Cover offering.

Click here to download Singleton’s opinion piece.

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