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If you need healthcare cover medical aid is always better (Medical Scheme or Health Insurance?)

20 January 2023 Profmed

Inflation rates were at 10-year highs in 2022, resulting in budgets being stretched if not broken. Since then, the projections for 2023 were indicative that the cost of living would continue to escalate well above salary and wage increases.

The South African Reserve Bank announced increases in the repo rate meaning that interest rates and consequently repayments on bonds and other credit facilities will place more pressure on the SA consumer. The recent proposed electricity hikes above 18.65% will also worsen the financial position of households. This is no different when it comes to medical spending where healthcare inflation is set to be between 9% – 12% in 2023.

Considering the economic climate, it appears practical to buy what you can afford. It is however important to understand that worldwide the number 1 reason for people declaring bankruptcy is due to unpaid medical expenses incurred by family members who did not have healthcare cover or the right cover. It is therefore essential that considering cheaper alternatives to healthcare cover whether it be buying down to cheaper options on your medical scheme or considering health insurance, may not be the best option. “Before deciding issues that concern your future, you need to do as much research as possible,” says CEO of medical aid scheme Profmed, Craig Comrie.

Comrie says medical aid and medical insurance may seem like the same thing, but the truth is that medical aid and medical insurance are two different products. “While medical aid provides comprehensive cover and tends to be more expensive than medical insurance, there are more to these products than just the price point. Yes, it’s better to have cover than no cover and both products provide cover for when you’re ill, but there are distinct levels of cover.”

Consumers tend to be confused when it is time to compare the two, but Comrie believes it comes down to value versus price. “If you need peace of mind and a full range of benefits, then you definitely need a medical scheme. If you are looking for basic cover, then you are probably looking at health insurance. There is an area of significant overlap in pricing and some health insurance products are more expensive than many medical scheme options and so you need to carefully look at the benefits and limits of the products you are considering” says Comrie.

The advantages of medical aid
All medical schemes are registered with Council for Medical Schemes (CMS), and one of the requirements for registration is that even the cover on the more affordable options, offer a reasonably comprehensive set of benefits known as Prescribed Minimum Benefits (PMBs).

Comrie lists the benefits of a medical aid as:

• Medical schemes are owned by its members who belong to the scheme and so there are no shareholders
• Members of medical schemes control and elect a Board of Trustees who make all the critical decisions of how the scheme is managed. There is no profit motive, and the Board annually tries to provide the best benefits at a reasonable cost to its members.
• Medical schemes provide a minimum but comprehensive set of cover (prescribed minimum benefits).
• Medical schemes on average pay 90% of your premiums to cover medical claims.
• Medical schemes provide a range of flexible ways to cover day-to-day medical expenses such as doctors’ visits, optometrists and medication; certain plans may come with a medical savings account for these claims.
• 85% of payments are made directly to doctors, hospitals or pharmacies (or if you pay upfront, you claim a refund back from your scheme).
• Medical Schemes profile and contract healthcare practitioners and hospitals who provide the best quality of treatment.
• Medical Aid usually has different cover options, depending on you and your family’s needs, which range from Hospital Plans to Comprehensive cover.

The ins and outs of medical insurance
Comrie says that medical insurance or hospital plans are not necessarily the cheapest option. “You have to know your health status before you downgrade your health cover. Do you have a chronic condition? Do you require dental constant treatment? Or need regular check-ups and tests for a particular illness or disease? These are all items that are likely not going to be covered in full in your hospital plan and any unpaid amount will come straight out of your pocket. Health insurance products are able to design very limited cover and therefore can be cheaper should you have no other alternative” advises Comrie.

He notes there are still terms and conditions to consider before taking a hospital plan or health insurance, including:

• Medical insurance products are provided by registered insurers with shareholders who require the insurer to turn a profit.
• Medical insurance often pays you, not the provider - this means you will need to settle your accounts, with any shortfalls coming out of your pocket.
• Medical insurance pays out set amounts selected when taking out the cover (for example per hospital visit or procedure with overall annual or per event limits).
• Medical insurance usually offers limited cover for day-to-day medical expenses such as doctors’ visits and medication.
• Medical insurance does not have cover for prescribed minimum benefits as laid out by the Medical Schemes Act.

So, which cover is right for you?
If you’re still young and healthy and thus unlikely to incur a lot of medical costs, consider carefully the cover offered by medical schemes who offer affordable products. Some of these products are comparable with the cheap health insurance products and a careful review of benefits should be undertaken with an accredited independent broker.

If you have or are starting a family, or you’re on chronic medication, Medical Scheme cover is probably a more appropriate fit. You may even be better suited for a Hospital Plan only, instead of Comprehensive cover based on your needs and medical expenses.

For more information about prescribed minimum benefits and which conditions are covered, visit https://www.medicalschemes.co.za/

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