An analysis of gap cover claims paid by Sirago Underwriting Managers shows that the quantum of medical scheme payment shortfalls for in-hospital treatment is increasing as financial pressure in relation to premiums is forcing consumers to buy down on their medical scheme benefits.

The growing quantum of gap claims volumes and values indicates a marked increase in the shortfalls between what medical schemes pay versus what healthcare providers charge for in-hospital procedures, as the trend of consumers buying down on their medical scheme benefits due to affordability gathers pace. The buy-down on medical scheme benefits to ‘core / entry level plans’ means access to lower benefits and exposure to more self-funding of their healthcare treatment to come from their own pockets if they do not have gap cover in place.

Gap insurance covers the shortfalls where doctors and healthcare providers charge more than the medical scheme rate at which you are reimbursed for in-hospital events/procedures.  These shortfalls occur in several ways including when healthcare providers charge more than the contracted / agreed tariff / rate with your medical scheme for certain in-hospital procedures; or your medical scheme applies co-payments or deductibles on certain in-hospital admissions and or procedures both for in and out of network occupancy and when certain expensive in-hospital items and appliances have annual sub-limits, for example the internal prosthetic devices used in a joint replacement procedure.

These shortfalls can range anywhere from 200% to 500% higher than the rate paid by your medical scheme. So, if your medical scheme option only pays out at 100% of tariff, like many core hospital plans do, you will then be liable to pay the shortfall of the other 200% to 400% charged by your healthcare provider as an “out of pocket” expense if you do not have gap cover – an unexpected and possibly debilitating expense which can easily run into tens of thousands of Rands and prove financially catastrophic. Gap cover is now a financial planning imperative for all medical scheme members.

Sirago highlights several recent gap claims to illustrate how onerous these shortfalls can be, and how gap cover protects you from a potential financial crisis:

  • Urinary and Reproductive systems – our client’s hospital and specialist bill for a minor procedure came to R15 496, of which the medical scheme only settled R5 165. Sirago gap cover settled the balance of R10 331 in full.
  • Blood forming organs and neoplasms – the client’s hospital bill came in at R47 130, of which the medical scheme paid R25 384. Gap cover settled the balance in full of R21 754.
  • Confinement: This new mother gave birth via caesarean section and received a bill from the gynaecologist of R27 000. Her medical scheme benefit only paid R3 786, leaving a shortfall of R23 213 which her gap cover settled in full.
  • Musculoskeletal – this client’s treatment bill came to R86 316 of which the medical scheme settled less than half of R42 439. Gap cover settled the shortfall of R43 877 in full.
  • Cancer: Besides dealing with the trauma of a cancer diagnosis, our client was faced with a hospital bill of almost R82 000, of which the medical scheme only paid R17 354.  The client’s gap cover settled the huge shortfall of R61 264 in full.
  • Mega gap claims – During 2022, Sirago paid three ‘mega’ claims for cancer and musculoskeletal surgeries coming in at R153k, R142k and R162k per claim for the gap portion alone.


“Without gap cover in place, these clients would have to foot these bills from their own savings, or go into debt to pay them, and the sums are certainly not lightweight. A few short years ago, gap claims averaged around R6000 to R12000. What we’re now seeing is a significant increase in average gap claim values – in fact mega gap claims which we classify internally as R50k+ – now occur on a daily basis. The sharp increase in gap claim values is firmly rooted in the affordability challenges that South Africans are facing in the current economic climate, compounded by the continual medical scheme alterations in benefit design, which is forcing a buy down in their medical scheme options.  Rising interest rates and bond and debt repayments, massive increases in utilities such as electricity, water and rates, food and healthcare inflation and overall cost of living are taking a huge toll, with household incomes nowhere near keeping up with these cost increases. The buy-down to core-plans means access to lower benefits, with more penalties and co-payments imposed by medical schemes for member non-compliance with scheme rules and networks – and thus exposure to more self-funding of their healthcare treatment to come from their own pockets,” explains Martin Rimmer, CEO of Sirago Underwriting Managers, a gap cover provider underwritten by GENRIC Insurance Company Limited.

“However, in this buy down-process, it’s important to fully understand the benefits and terms of what you are covered for and to revisit your expectations of your cover, as well as mitigate the shortfall risks effectively. Most only find out the true extent of these shortfalls when they experience a health crisis. The clarion call is to get professional advice from an accredited financial advisor, and if you are moving to a more affordable core hospital plan, to make sure that you add gap insurance to cover any potential in-hospital tariff shortfalls,” explains Rimmer.

When you consider the potential financial quantum of a shortfall on your medical scheme benefits, and that a gap cover premium is around R452 per month for a family (2023 Sirago Plus Gap), and each family member is covered for up to a maximum of R191 000 per annum (from April 2023), it is clear that Gap Cover is a non-negotiable part of your healthcare financial strategy.  A single gap claim of R60k would be the equivalent of almost 13 years of premium payments at current premium rates.  Given the current trajectory, medical scheme members cannot afford not to have supplementary gap cover to fill the holes in their medical scheme cover, especially on the high-risk treatments such as surgery, confinement and oncology where the tariff shortfalls can easily breach the R100k mark.