Why gap cover is an essential shield against financial devastation in South Africa’s private healthcare system

“You may think that my use of the term ’devastation’ is overly emotional or exaggerated. I can assure you, it is not. I have witnessed firsthand the financial devastation some medical scheme members have been subjected to due to inadequate, inappropriate and sometimes unaffordable healthcare cover.” Martin Rimmer, CEO of Sirago Underwriting Managers. 

Every year, thousands of South African medical scheme members walk out of private hospitals with something they did not expect: a serious bill not covered or only partially covered by their medical scheme benefits based on their specific option, from the specialists who treated them – anaesthetists, surgeons, neurosurgeons, cardiologists, oncologists, gynaecologists, and so on.

In most instances, specialist doctors charge rates well above what the medical scheme benefit pays for in-hospital treatment. The result is a tariff shortfall, also referred to as the medical scheme tariff/rate, that the member must fund personally.

For many, this revelation arrives at the worst possible moment: in the aftermath of an elective hospital admission – for example a knee and hip replacement or emergency spinal surgery – when physical recovery is already mentally and physically hard enough without the weight of an unexpected five- or six-figure debt causing undue stress.

This is the reality of private healthcare in South Africa, and it is precisely why gap cover exists. Real claims data from Sirago Underwriting Managers shows just how significant these shortfalls are and why, regardless of your medical scheme option, gap cover should be considered an indispensable part of your private healthcare funding strategy. This is exactly where your financial advisor must play an important part in your healthcare financial planning.

The Regulatory Framework: Why Gaps Exist at All

South Africa’s private healthcare system is governed primarily by the Medical Schemes Act, overseen by the Council for Medical Schemes (CMS). The Act requires all registered medical schemes to fund a defined basket of Prescribed Minimum Benefits (PMBs) – a set of serious conditions and emergency events, at cost, meaning the scheme must cover the full cost of treatment, regardless of what the healthcare provider charges.  PMB management is incredibly complex, and challenging for any layman to understand, as the rules, while universal, are applied differently by the medical schemes.

In theory, PMBs sound like a comprehensive safety net. In practice, it is far more complicated. Whether a condition qualifies as a PMB, how the scheme interprets its protocols, whether a Designated Service Provider (DSP) is involved, and whether the treating specialist has a tariff agreement with the scheme all affect the amount actually paid.

The payment rift lies in specialist tariffs. Unlike the pharmaceutical sector, where medicine prices are regulated under the Single Exit Price mechanism, there is no regulatory ceiling on what a healthcare specialist may charge in South Africa. Specialists are free to set their own fees, and in a market characterised by acute skills shortages and growing demand, many charge rates that are 200% to 500% higher than what medical schemes reimburse.  There are even some outliers where the tariff rates are 800% higher than the scheme payment.

The scheme will only ever pay its contracted rate. The specialist charges their preferred rate, even if they are contracted with the schemes. The difference, which can run to tens or even hundreds of thousands of rands, is the tariff shortfall, and it lands in the member’s lap. This is the “gap” that the industry refers to.

Medical Scheme Membership Is Not Full Cover

There is a widely held and potentially very costly misconception that belonging to a medical scheme means your in-hospital treatment is fully covered. It is not.

Most medical scheme options reimburse in-hospital specialist fees at a fixed percentage of a reference tariff, commonly referred to as the Scheme Rate or Scheme Tariff. But these benchmarks have not kept pace with actual market charges, and a specialist billing at 500% of tariff will leave even a member on a 300% reimbursement option facing a 200% shortfall on their own account.

Beyond tariff shortfalls, medical schemes can/also impose:

• Co-payments: Fixed rand amounts a member must pay for certain procedures or hospital stays.
• Sub-limits: Annual rand caps on specific benefits, after which the member funds further treatment.
• Benefit exclusions: Certain treatments or procedures that schemes simply do not cover at all.
• PMB interpretation gaps: Where a diagnosed condition is not recognised by the scheme as a PMB under their protocols, even if it is clinically serious.

Gap cover is a short-term insurance product regulated under the Short-Term Insurance Act, specifically designed to bridge the shortfall between scheme reimbursements and actual healthcare provider charges for in-hospital events. It does not replace a medical scheme but works alongside it as supplementary cover.

A Snapshot of Real Gap Claims

To understand just how severe these shortfalls can be, consider the following analysis of gap cover claims paid by Sirago Underwriting Managers across a representative sample of 2330 large loss claims between 2020-2025. (A large loss claim is defined as R50 000+).

These are claims by real individuals with membership cover from Sirago, from every age group, who were admitted to private hospitals for medical conditions ranging from joint disorders to cardiac emergencies to cancer to birth complications to respiratory conditions. In every case, their medical scheme paid something, but not the full amount of the claim. Without gap cover, these amounts would have come from their own personal savings.

And contrary to the common assumption that serious healthcare costs are primarily a concern for the elderly and sickly, these claims span every demographic:

Age Group	No. of Claims	% of Total	Avg large loss Gap Claimed	Highest Single Claim
0 – 29 Years	117	5%	R60,517	R164,000
30 – 49 Years	415	18%	R58,060	R173,589
50 – 65 Years	709	30%	R62,857	R201,000
66 – 75 Years	639	27%	R65,221	R204,942
76+ Years	450	19%	R64,755	R211,293
TOTAL	2,330	100%	R62,900

(Source: Sirago Underwriting Managers claims data 2020-2025. The ‘Amount Claimed’ represents the gap amount or shortfall not covered by the medical scheme and which was paid by Sirago, in addition to the medical scheme’s portion of the total treatment cost.)

23% of all large loss gap claims are from members aged 49 and under – people who statistically believe themselves to be young and healthy – are submitting claims averaging R58,000 for conditions they did not see coming.

In almost half of Sirago’s large-loss gap claims in 2024, gap cover paid out more than the medical scheme did. In one case, gap cover paid R126,771 while the medical scheme paid only R27,573 – just 18% of the total treatment bill. The member’s medical scheme premium was R8,000 a month. Their gap cover premium was R450. Without that gap policy, they would have been personally liable for R126,771.

Claims by Condition Type

The following breakdown illustrates which medical categories generate the most gap claims:

Condition Category	No. of Claims	% of Total	Avg Gap Claimed
Musculoskeletal & Connective Tissue	1,139	49%	R61,659
Neoplasms (Cancer)	214	9%	R60,830
Circulatory System	202	9%	R89,241
Injury, Poisoning & External Causes	186	8%	R58,264
Respiratory System	119	5%	R60,147
Digestive System	109	5%	R53,547
All Other Conditions	361	15%	Various

 

Musculoskeletal conditions such as spinal stenosis, disc disorders, rotator cuff, knee injuries and joint degeneration dominate at 49% of claims. These conditions affect every age group and typically require surgical intervention on an elective basis. Medical schemes frequently impose co-payments and sub-limits on elective orthopaedic procedures, particularly where internal prosthetics or specialised implants are involved.

Circulatory conditions, while accounting for only 9% of claims by volume, have the highest average gap of R89 000.  Cancer, also at 9% of claims and an average of R61 000 per claim, and respiratory conditions at 5% and an average claim of R60 000, reflect the complexity and cost of cardiac, vascular and respiratory surgeries, as well as cancer-related surgeries, where specialist fees can be extremely high and PMB determination can be contested.

Selected Individual Claims: The Human Cost

The following real examples drawn directly from Sirago’s claims data illustrate the magnitude of individual shortfalls. For every R shown below, the medical scheme paid its portion – these amounts are only what remained unfunded and what would have been the member’s personal liability without gap cover:

 

Age Group	Condition	Gender	Gap Amount Claimed	Category
76+ yrs	Thoracoabdominal aortic aneurysm	Male	R211,293	Circulatory
76+ yrs	Neoplasm of uncertain behaviour, meninges (growth on the brain/spinal cord lining)	Female	R205,400	Neoplasm
66 – 75 yrs	Acute ischaemic heart disease	Male	R204,942	Circulatory
76+ yrs	Spinal stenosis, cervical region	Female	R197,693	Musculoskeletal
76+ yrs	Malignant neoplasm, gum	Male	R189,309	Neoplasm
66 – 75 yrs	Spinal stenosis, lumbar region	Female	R183,000	Musculoskeletal
50 – 65 yrs	Spinal stenosis, thoracic region	Female	R175,709	Musculoskeletal
30 – 49 yrs	Acute ischaemic heart disease	Male	R152,360	Circulatory
0 – 29 yrs	Tetralogy of Fallot (a congenital heart condition present at birth)	Female	R141,441	Congenital
50 – 65 yrs	Malignant neoplasm of breast	Female	R70,732	Neoplasm
30 – 49 yrs	Lumbar disc disorder with radiculopathy (often called sciatica)	Male	R58,732	Musculoskeletal
30 – 49 yrs	Scoliosis, lumbar region (age 21, Female)	Female	R102,821	Musculoskeletal
0 – 29 yrs	Respiratory distress syndrome, newborn (age 6 days)	Male	R77,061	Perinatal

(These figures represent the gap claimed amount only – the shortfall between what the medical scheme reimbursed and what the specialist or hospital account charged.)

Perhaps the most striking claim in this dataset is the 30-49 year age group claim of R152,360 for acute ischaemic heart disease, a heart attack. This is not an elderly retiree with known cardiac risk factors – this is a working-age adult, almost certainly still servicing a bond, raising children and supporting dependents. A R152k out-of-pocket payment in that context is potentially financially devastating. Equally sobering is the R102,821 gap claim from a 21-year-old female with lumbar scoliosis. This claim represents a financial burden that could follow a young person for years.  While these claims are not the norm, it is important to remember that ill health and/or disease are not age-selective.  It can strike at any time. 

The Widening Divide: What Is Driving These Shortfalls?

• Unregulated Specialist Fees – South Africa faces a pronounced shortage of healthcare professionals across every specialty. Emigration, limited training capacity, and uncertainty created by healthcare reform have reduced the pool of specialists available to serve a growing, ageing, and increasingly health-burdened population. In this environment, specialists operate in a seller’s market. With no price regulation binding them, fees have escalated consistently and materially above general inflation.
• Benefit Erosion by Medical Schemes (Risk transfer) – Faced with runaway provider costs, medical schemes have responded in two ways: increasing contributions and simultaneously restricting benefits and access. Many South African families, squeezed by economic pressure, have opted to buy down to more affordable, hospital-only plans. While these plans offer essential in-hospital cover, their tariff reimbursement levels – often 100% of the scheme rate – are wholly inadequate relative to what specialists charge. The result is that the gap grows larger precisely as the member’s financial cushion shrinks.
• The PMB Complexity – The PMB framework, intended as a floor of protection, can be inconsistently applied. Whether a condition is classified as a PMB, how the scheme defines its clinical entry criteria, and whether the treating provider qualifies as a DSP for that condition all affect the member’s financial outcome. Disputes over PMB status are very common and in the interim, while the member is recovering, the bills accumulate and the providers are demanding.

Gap Cover: What It Does and Does Not Do

Gap cover is a short-term insurance product, not a medical scheme. It does not replace your medical scheme membership and it does not fund day-to-day outpatient expenses such as pathology or medication. What it does do, is address the specific and potentially devastating financial exposure that arises from in-hospital events where your scheme’s benefit pays less than what specialists actually charge for treatment.

A comprehensive gap cover policy will typically cover:

• Tariff shortfalls: The difference between what a specialist charges and what your scheme pays, for in-hospital procedures.
• Co-payments and deductibles: Fixed amounts your scheme requires you to contribute toward a hospital admission or procedure.
• Sub-limit top-ups: Coverage once a specific scheme benefit (e.g., internal prosthetics, MRI, oncology) has been exhausted within the benefit year.
• Initial cancer diagnosis benefits: Lump-sum payments to fund the diagnostic costs of an initial cancer diagnosis, such as PET scans, MRIs.
• Cancer co-payment cover: Coverage of ongoing treatment co-payments once the scheme’s cancer benefit sub-limit has been reached.

A comprehensive gap cover product such as Sirago’s Ultimate Gap provides up to R223,000 per beneficiary per annum in gap cover protection, for a family premium of around R780 per month (2026 rates). Based on Sirago’s average large-loss gap claim of R63,000, a single claim would be equivalent to nearly seven years of premium payments.

Gap Cover Is for Every Age and Health Status

One of the most persistent myths about gap cover is that it is primarily needed by older, sicker members on lower-benefit scheme options. Sirago’s 5-year claims data factually dispels this view.

The 0–29 age group includes a six-day-old newborn with respiratory distress syndrome (R77k gap claim), a 17-year-old with a circulatory condition (R113k gap claim), a 17-year-old with Tetralogy of Fallot, a congenital heart condition (R141k gap claim), and a 21-year-old with scoliosis (R102k gap claim). None of these young patients or their families anticipated these events. Most people in their twenties are on entry-level or mid-tier medical scheme options, precisely the plans most exposed to tariff shortfalls.

In the 30-49 age group, lumbar and cervical disc disorders dominate – conditions increasingly common among desk-bound working adults. A herniated disc in a 38-year-old requiring surgical decompression generates a gap claim of R80k. A heart attack at age 44 saw a gap claim exceeding R150k in specialist shortfalls alone.

Cancer, too, respects no age threshold. Sirago’s analysis of initial cancer diagnosis claims shows that 16% of all ICD (Initial Cancer Diagnosis) claims are from the 30-49 age group, with female patients in the 40–49 bracket constituting 12% of the total. The economic and emotional cost of a cancer diagnosis is devastating at any age; the financial cost of inadequate cover for diagnostic tests, chemotherapy co-payments and biological drug shortfalls can compound that devastation immeasurably.

The Five-Year Trajectory: An Accelerating Crisis

Sirago’s large-loss gap claims data over five years (2020–2025) reveals a picture that demands attention. Mega claims – those exceeding R50,000 – have increased by 512% in volume and 437% in value over this period. In 2020, 89 such claims totalled R6.2 million. By 2024, 549 claims totalled R34 million. Claims exceeding R60,000, once exceptional, are now daily occurrences.

Cancer-related gap claims have surged in parallel. Initial cancer diagnosis claims increased by 263% between 2020 and 2024, reflecting both the delayed-diagnosis effects of the COVID-19 pandemic on preventative healthcare and a structural increase in cancer prevalence across the covered population. Cancer co-payment claims covering ongoing treatment shortfalls once scheme sub-limits are reached, increased by 130% in 2024 compared with 2022, when this benefit was first introduced.

These claims represent a fundamental and accelerating shift in the financial exposure of medical scheme members, and they argue powerfully for a serious re-examination of healthcare financial planning across all income levels and all age groups.

What You Should Do

1. Don’t assume your scheme option is adequate: Review your current scheme option’s tariff reimbursement level. If your scheme pays at 100% or 200% of tariff, you are likely significantly exposed to shortfalls for any specialist-heavy in-hospital event. Ask your broker to provide a tariff gap analysis.
2. Add gap cover – regardless of your scheme option: Even comprehensive scheme options leave members exposed to tariff shortfalls. The gap is a function of the unregulated spread between specialist charges and scheme rates, not solely of scheme option level. Gap cover is relevant for every member, on every option.
3. Understand your PMBs – and their limits: Know which conditions qualify as PMBs under your scheme, and understand your scheme’s DSP (designated service provider) arrangements. Familiarity with your benefit rules empowers you to make better decisions at the point of care.
4. Get a quote before a planned procedure: For elective surgery, request a formal quote from every treating specialist, not just the surgeon, but the anaesthetist, and any other providers involved. Ask what they charge relative to your scheme’s tariff. Where there is a significant shortfall, engage your gap cover provider to confirm benefit availability. Gap Cover providers DO NOT provide pre-authorisation and/or confirmation of exact costs.
5. Do not disclose your gap cover to healthcare providers: There is growing evidence in the sector that some providers adjust their billing upward upon learning that a patient holds gap cover. You are under no obligation to disclose your gap insurance to your healthcare provider. Your scheme membership details, required for pre-authorisation, are sufficient.
6. Work with an accredited healthcare financial advisor: Healthcare funding is complex, and the interaction between medical scheme benefits, gap cover, critical illness insurance, and disability cover requires coordinated planning. An independent, accredited broker can help you develop a healthcare financial strategy tailored to your specific health profile, life stage and budget. Brokers and advisors who specialise in medical scheme advice know best!

The Cost of Being Unprotected

A medical scheme membership card is not a guarantee of complete cover for a health crisis. It is an agreement that your scheme will fund your healthcare up to certain limits, at certain rates, for certain conditions. Beyond those limits, beyond those rates, and in the grey areas between PMB classification and providers charges, members are on their own – unless they have gap cover.

Sirago’s claims data is a window into the financial realities that real South Africans face in private hospitals every day. A 44-year-old man needing spinal surgery. A 58-year-old woman with breast cancer. A 66-year-old man with unstable angina. A 24-year-old athlete with a torn knee. Their medical scheme paid a portion. In each case, a large gap existed. More importantly, in each case, without gap cover the outstanding/shortfall amount often exceeding R60,000 and in some cases exceeding R200,000, could have been a devastating personal financial liability.

At a family gap cover premium of approximately R780 per month, the protection provided is by any measure, disproportionately valuable relative to its cost.

Gap cover is not a luxury add-on for the well-off. It is a financial solution necessity for any South African who relies on private healthcare as a medical scheme member in the country.