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How Medical Aid Savings Work

A Guide on How Medical Aid Savings Accounts Work.

Medical aid savings in South Africa have 2 claim payment methods:

1. Traditional plans with no savings, where day-to-day costs paid from a shared fund. What is not used is lost.
2. Separate savings fund, funded by an additional portion added to your premium.
   These are like an interest-free loan to be used for out-of-hospital costs.
   Unused funds are carried over to the next year.

Some plans have a safety net should savings be spent before year-end.

There are plans where your savings are only repaid when you spend them, letting you control your premium.

Medical aids are the best way you can cover the risk of unexpected, in and out-of-hospital healthcare costs.
They do this by paying claims in 3 ways:

1. In hospital (called risk) costs from admission to discharge.
2. Day-to-day (out-of-hospital) routine medical costs like doctors' visits and prescribed medication.
3. Chronic conditions.

How day-to-day costs are paid by a medical aid.

There are three methods of claim payments: Traditional, Savings, or a Combination of both.

1. Traditional Payment - no savings as your day-to-day costs are paid from a shared fund in the scheme.

Members receive a portion of that fund, based on their membership profile.

Benefits are on a use-it-or-lose-it basis, as any unused funds do not carry over to the next year and are lost.

2. Savings Payment - you are given a fund of money, created from additional amounts added to your premium.
It is like an interest-free loan.

You pay all out-of-hospital costs from that fund and any unspent balance carries over to the next year.

More expensive plans have a safety-net benefit should you spend all the savings in a year.

3. Combination of Traditional and Savings methods - there are plans where costs are first paid from a savings fund, and once that is spent, from the shared pool of funds.

A note on Prescribed Minimum Benefits (PMB)
The Medical Schemes Act ensures that all medical aid members have access to certain essential medical services and treatments, regardless of their chosen benefit option. These PMB benefits cannot be paid from a savings account.
However, schemes may impose conditions, like specific generic medicines or the use of designated providers.

You need to be aware of your plan's terms and conditions, and understand your PMB benefits and payments.

Above Threshold Benefit
When your savings are spent, and your claims reach a predetermined amount, this benefit kicks in, providing additional benefits for the rest of that year.

It may only apply to certain treatments or providers, and the benefits may be limited.
It resets annually.

If you have an Extended Benefit, certain day-to-day claims are covered when savings are spent, but before the threshold has activated.

Medical aid plans have sub-limits on certain benefits, (even with a Threshold Benefit in place,) and once you reach these sub-limits they will not pay for additional claims, even if you have funds available.

Ask us to clarify what your scheme covers.

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Important points to note:

• Self-Payment Gap: When your savings are spent, but the threshold has not yet been activated because your claims have not accumulated to the threshold amount. You self-fund further claims until the threshold amount is reached.
  Spend carefully when you are in a self-payment gap.
• Some claims may not contribute to the threshold limit, like over-the-counter medicines.
• Threshold claims only accumulate at the 100% of scheme rates, not at private rates.
• Above Threshold claims are generally paid at scheme rates, not private rates.
  If your claim is at "private rates," you will need to self-pay any difference.
• There is one savings fund per family membership, so take care that one family member does not exhaust all the savings.
• You cannot withdraw unspent savings. Any balance is only paid out when you terminate your membership, without joining another medical aid plan with a medical savings account.
• Premiums cannot be paid from your medical savings account.

9 Essential Tips:

1. Read and understand your medical aid rules thoroughly. Talk to us if you have any concerns.
2. Try not to pay for over-the-counter medicines from savings. It is a sure way to use savings very quickly. Use cheaper, generic medicines.
3. Do not buy multiple medicines for the same condition, like medicines for a runny nose, sore throat and fever, as they can often be obtained in one product.
4. Use consumer rewards programme when buying health care products.
5. Find doctors and dentists who charge lower rates. If your scheme has listed providers use them, as they will charge negotiated rates with the medical aid.
6. Choose cheaper frames for glasses. Designer frames may look good, but they won't improve your vision.
7. Investigate more affordable dental procedures.
8. If you have prescribed minimum benefit (PMB) chronic conditions, make sure you use your medical aid to pay for them.
9. Make use of preventative benefits your scheme offers, such as those for pap smears, mammograms, prostate cancer screening, dental check-ups and flu vaccines.

If you find you are spending all your savings, you may need to consider upgrading your plan to one that has higher savings, or save money in your own medical fund.

Compare the increased savings amount to the premium increase over the year.
That will guide you on a decision whether to upgrade your plan.

Ask us to look at alternative plans for you.

You must consult the schemes/company product brochures and rules for comprehensive benefit descriptions.

083 655 2164

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