Medical savings accounts demystified

"Sometimes MSAs can harm rather than advance member interests, especially when healthcare consumers do not fully understand how best to use them," he adds.

In terms of the Medical Schemes Act, up to 25% of the members' premiums can be set aside and put into savings accounts. Savings accounts were originally created to give members control over their day-to-day healthcare expenditure such as visits to general practitioners, specialists and obtaining over-the-counter medication. The MSA system was designed to transfer a portion of the medical scheme risk so that funds are not used from the main risk pool and cannot be used for cross-subsidisation purposes.

This means that members are effectively paying for their day-to-day expenses from their pockets -- although a portion of the funds being used is paid in advance at the beginning of the year, thereby effectively affording members a form of credit.

 

The system of savings accounts was initially designed to make members more accountable for their healthcare expenditure, thereby curbing overuse. The fact that cross-subsidisation is virtually eliminated holds a certain appeal to healthy members. However, on the other hand, members often feel aggrieved when forced to dip into their own pocket to fund their medical expenses. This can happen when members' savings account benefits are exhausted. It is at this point that the self-payment gap, a specifically allocated amount that has to be settled by a member once the MSA has been depleted, comes into play. Some medical scheme options offer relief in the form of benefits from the risk pool which kick in after members have self-funded their medical expenses for a while. This, however, differs from medical scheme to medical scheme and is generally not available on hospital plans.

Resolution Health Medical Scheme has approximately 70 000 beneficiaries, of which fewer than 10% are on the scheme option that offers a medical savings component. MSAs were introduced by Resolution Health in 2011 to provide young, healthy members with the option of opting to manage their own day-to-day healthcare expenses. The Scheme however remains largely traditional in nature.

"The reason why we chose not to provide new generation options with a savings component from the outset was because no amount of responsibility can guarantee that MSA benefits will not run out in the middle of the flu season. For a family of four this may well mean that a few visits to the doctor and the filling of a number of prescriptions will not be covered. Considering the costs associated with medical scheme membership, this is hard for members to understand and to accept," notes Arnold.

Arnold highlights a number of important points that members need to know before choosing a new generation option with an MSA benefit:

• An MSA benefit is shared between a member and his or her dependants.

• Medical schemes are required by law to provide comprehensive cover for 271 of the most common and serious medical conditions through prescribed minimum benefits (PMBs). This means that they are legally responsible for paying the cost of treating these illnesses, which include emergencies and 26 listed chronic conditions such as hypertension, asthma, epilepsy and diabetes. PMB payments are funded by the main risk pool of a medical scheme. Unfortunately, not all schemes point this out to members, and may avoid paying for PMBs from the main pool of funds. It is therefore imperative that the right questions are asked by medical scheme members.

• All medical scheme members should try to understand their products and should ask the scheme for more information when they are unsure of anything. Most schemes have websites for those within reach of computers -- but all have call centres or healthcare advisors who can explain anything that is unclear.

• As members age more health problems may arise and they may prefer to be on traditional schemes with the security of specifically allocated benefits.

• It is important to highlight that co-payments can unfortunately by law not be funded from your MSA.

 

• If a medical scheme member accumulates a credit balance in their MSA they cannot draw the cash. This is only possible upon termination of membership of a medical scheme and on the proviso that another medical scheme with an MSA option is not joined.

• It is strongly recommended that healthcare consumers ascertain whether their medical scheme option makes provision for visits to hospital emergency departments and if such consultations are funded from their MSA. In many instances visits to emergency departments are only funded by the scheme if the member is hospitalised.

"Members should be better equipped to make informed decisions when choosing between traditional options which do not have savings accounts and those that do. My advice to healthcare consumers would be to weigh up the pros and cons of a medical savings account versus the security of allocated benefits in a traditional option," concludes Arnold.