18 October 2013

This week’s National Treasury media release on the progress that has taken place in drafting the Demarcation Regulations on health insurance and medical schemes, contains very good news for Gap Cover policyholders.

These regulations look set to recognise the legitimate right to cover the financial exposure to medical treatment costs that are not covered by medical schemes.

Following the first draft Regulations which were published 2 March 2012, comments were submitted from 343 interested parties. Eliciting the vast majority of response related to the proposed prohibition of Gap Cover.

Following the vehement opposition, the National Treasury and the Department of Health have revised the draft Regulations for a further period of public comment before the Regulations are finalised and gazetted.

While the outcry resisting the prohibition of Gap Cover must have weighed heavily in favour of Treasury’s shift to accepting the need for Gap Cover, there appears to be another, more compelling reason why this change of heart has taken place.

An article in Business Day quotes the Treasury’s deputy director-general for tax and financial sector policy, Ismail Momoniat, as saying: “We are worried that Gap Cover is undermining the medical schemes industry, but it would be unconstitutional to ban these products”.

This revised second draft of the regulations will therefore provide for the continued use of Gap Cover within certain parameters to ensure medical schemes are not compromised.

We are comfortable with the imposition of these requirements as we have always viewed gap cover by definition to be a medical scheme supplement and not an alternative. Furthermore our policy design has always demonstrated our support for the principle of social solidarity by guaranteeing acceptance to all applicants as we’ve neither employed underwriting or maximum entry age criteria.

It just goes to show, it’s not always bad news when you open the newspaper.

Thank you Treasury.