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.

Treasury press releaseThese regulations acknowledge and uphold the right to provide coverage for the financial exposure to medical treatment costs that medical schemes do not cover.

Following the first draft Regulations elicits the vast majority of response related to the proposed prohibition of Gap Cover.

As a result of the vehement opposition, the National Treasury and the Department of Health have revised the draft Regulations. There will be a further period of public comment before finalizing and gazetting the Regulations.

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

In an article published in Business Day, the National Treasury’s deputy director-general for tax and financial sector policy, Ismail Momoniat, expresses concern about Gap Cover undermining the medical schemes industry, but he states that it would be unconstitutional to ban these products.

The revised draft of the regulations will ensure the continued use of Gap Cover to prevent the compromise of medical schemes.

We are comfortable with the imposition of these requirements as Gap Cover is 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 National Treasury.

The information contained in this communication, including attachments, is not to be construed as advice in terms of the Financial Advisory and Intermediary Services Act of 2002 (“FAIS”) as the writer is neither an appointed representative of Zestlife, nor a licensed financial services provider as contemplated in FAIS. Please consult your Financial Adviser or Zestlife should you require advice of a financial nature and/or intermediary services.