Why group gap cover is a game-changer for employees and employers alike

26 September 2023
min read

Over the years, there have been many gap cover products launched in the market that target individuals. Group gap cover schemes, however, offer many more advantages and benefits to both the employer and the employee. The payment of premiums is streamlined, there is continuity of coverage for employees who resign, and employers have peace of mind knowing that their employees have a financial safety net for unexpected medical bills. Furthermore, whether the gap cover is offered on a compulsory or voluntary basis, corporates can offer employees additional benefits by negotiating group institutional rates and value adds.

What is gap cover?

Gap cover is a short-term insurance product that covers the shortfall between the medical scheme's rates and the rate that private healthcare professionals charge. It doesn’t replace comprehensive medical cover, it complements it. The good news is that gap cover is affordable, and it could save your employees thousands of rands if they find themselves burdened with unexpected medical expenses and out-of-pocket costs that they didn’t budget for. Gap cover should no longer be seen as a luxury. It is a necessity. If you take the well-being of your employees seriously, it is important to make sure they are not left financially destitute in a medical emergency. You can protect their financial future.

Employer versus individual basis

When you arrange gap cover as part of an employee benefit programme, your employees are often given preferential rates, as well as reduced waiting periods. Some providers offer additional value adds such as trauma counselling, top-up cancer cover and lump-sum pay-outs for first cancer diagnoses. It is also important to remember that cost is not always the key indicator of value. You need to compare the benefits you can get for your employees at the cost quoted because you will typically get additional benefits with the corporate offering. The individual costs for group arrangements need to be quoted on a case-by-case basis depending on the number of employees to be covered, as well as the unique benefits required per employer.

The advantages of group gap cover

One of the many benefits of offering group gap cover is improved productivity. Occupational Care South Africa (OCSA) reported that absenteeism costs the South African economy from R12 billion to R16 billion per year, while Human Capital Review estimates the cost to be R19.144 billion annually. Besides improving productivity, gap cover also offers employers these important benefits:

  • Employees get better rates because of economies of scale
  • Employer groups are often offered more comprehensive coverage
  • Employers with attractive benefit packages attract and retain employees
  • Employees that are injured or sickly get the medical care they require without carrying a massive financial burden
  • Employees enjoy peace of mind knowing that they are covered

Your employees need to be productive for your business to perform at its best. If you offer your employees gap cover, they will also recover faster and return to work because they have not had to wait until they have enough money to cover their medical expenses. Gap cover provides a safety net that gives both the employee and the employer peace of mind.

A payroll deduction makes paying for gap cover easy

As an employer, you have the choice of paying the gap cover premium for your employees or offering it to them but implementing a payroll deduction. With a payroll deduction you know the premiums will always be paid on time. In addition, your employees don’t feel the deduction because it is taken off before they get their salary in the bank. This provides all parties – employee, employer and provider – with a simplified payment process that ensures seamless premium contributions. This payment method is economical and efficient. It is also convenient for everyone involved. It ensures that your employees don’t slip on the payment of the premiums, giving them another safety net that provides financial peace of mind.

Your employees enjoy continuity of coverage

The continuity of gap cover is an important concern for many employees when they resign from a company. Some gap cover providers in South Africa offer underwriting policies that allow employees to transition from a group scheme to an individual policy with minimal underwriting. This means that, in some cases, they can continue their gap cover without having to go through extensive medical assessments, which could potentially result in higher premiums or exclusions. To make sure there is no break in membership, employees leaving a company can arrange to continue making payments directly to the insurer.

Overall, it's important to recognise that continuity of gap cover is achievable when leaving an employer. Remember to encourage your employees to research their options, communicate proactively and understand the terms and conditions of their gap cover policy. This will ensure they enjoy a smooth transition and continue to receive the benefits they need to cover their medical expenses effectively.

The value of gap cover

In an article published in BusinessTech (2023), there is a real-life scenario of how gap cover helped Mr Smith, 69, in January while visiting his children in KwaZulu Natal. The article said, “Whilst attempting to pack a box into a storeroom, he tripped and fell over an extension cord. Initially, he did not give the incident much thought until the back pain began setting in.” He was later diagnosed with Sciatica in the lumbar region, a condition that required a spinal fusion together with a laminectomy to decompress the nerve.

“Total treatment costs amounted to over R147 000.00, with the medical aid covering only a small portion of the bills (R20 251.00, to be exact). Thankfully for Mr Smith, he had taken out medical gap cover through Total Risk Administrators, which took care of the outstanding balance. His story illustrates the importance of investing in short-term insurance, like gap cover, to settle the shortfall between a medical scheme tariff and the applicable rates charged by private healthcare providers.”

The importance of employee well-being in the workplace

There is much value in including gap cover in a company’s holistic approach to employee wellbeing and satisfaction. Research shows that as much as 76% of South Africans run out of money before the end of the month. Furthermore, 89% of South African employees worry about being able to pay their bills at the end of every month. Added to this, unexpected medical bills that these employees didn’t plan for can only result in a heavier financial burden and strained well-being in the workplace.

When employees are under pressure financially, they find it difficult to concentrate, their morale is low and they are less productive. On the other hand, offering them gap cover as part of a holistic employee benefits package makes them feel cared for and gives them relief. It is also a drawcard for attracting top talent. It really is a small cost to cover when you think of the benefits you will see over the long term.

NMG has experienced healthcare consultants who can help you assess which gap cover provider and plan would best suit your business. They have extensive experience with different providers so they can review requirements and give you quotes on a solution that will best suit your company.

T&Cs apply. NMG Consultants and Actuaries (Pty) LTD is an authorised financial services provider FSP 12968


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