What is Medical Aid in South Africa and how Does it Work?

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How Does a Medical Aid Really Work?

Medical aid is an insurance type plan you join - and pay a monthly contribution or premium - to get help when paying costs of medical treatment like the best hospitalisation, chronic illness and day-to-day treatment. And to get that help quickly!

No one can be refused membership of a medical scheme.

Do you fear having to use government hospitals?

hospitalDo you really feel safe and secure - having to use a state hospital? Do they offer the best care?

There are fine medical providers in the government healthcare system, but overall the state of care is appalling and it is your health that is at risk!

Public healthcare is more affordable than private, but state hospitals are not always free!
If you are employed and earning more than R70 000 a year, you will have to pay some or all of the costs of your care.

Private healthcare is an alternative. But, private healthcare costs and arm and a leg!
Unless you have a large resource of easily available money, you many not be able to get the best medical treatment you need!

The ONLY way to get ensure that you will get the finest private medical care (immediately in an emergency), is through a medical aid.

There are around 21 medical schemes in South Africa and that you can investigate and consider joining.
However, not all schemes are the same and differ widely in benefits, administration and solvency.

It is highly recommended you seek the help of medical aid professionals like ourselves, who can guide you in the right direction when you investigate plans to join, as there is a lot you need to be aware of before you decide on a scheme.

As a healthcare plan member, you do have certain enforceable rights according to the Medical Schemes Act. Please see Council for Medical Schemes

How does a medical aid work?

what is medical aidAll medical aids are regulated through the Medical Schemes Act, which is enforced through the Council for Medical Schemes.
This is a statutory body established to provide regulatory supervision of private health financing, through medical scheme.

Their vision is to: "Promote vibrant and affordable healthcare cover for all."

Medical schemes are non-profit companies, managed by a board of trustees who are elected by the members. Schemes exist only for the benefit of their members and funds are used for administration and claims of these members. This helps to ensure that every member benefits from cross-subsidisation - where the healthy support the sick.

Schemes must hold 25% of every member's annual contribution in in a reserve fund.
This adds security for members, ensuring that there are always funds for claims.

There are "open medical aid schemes," which anyone can join and "closed schemes," specifically designed for employees of companies.

Premiums are also carefully regulated.
Everyone pays the same premium for their plan, regardless of their age or health. A scheme cannot "load" a member's contribution, other than by way of a Late Joiner Penalty (see below ...)

What are waiting periods?

waiting periodA medical scheme may impose waiting periods after underwriting your application. You need to accept them before a plan will begin.

A 3-Month Waiting Period - depending upon when you were last a medical aid member.

A 12-month Waiting Period - will be imposed if you join with a pre-existing medical condition. After that period, you should have full cover.

Waiting periods are allowed in order to protect the scheme where, new members submit claims when they join, then leave the scheme and return to an old plan - where they may have used up their benefits, but do prefer that old scheme!

Waiting periods do not apply to:

  1. Prescribed minimum benefits (PMBs) other than those specified.
  2. A child dependant born during the period of membership.
  3. A member moving between benefit options, unless there is a remaining period of previously imposed waiting periods still to complete.
  4. An involuntarily transfer to another scheme, due to a change of employment.
  5. Where an employer changes the medical scheme with effect from the beginning of the financial year.

You must pay contributions during a waiting period.

What are late joiner penalties?

New applicants older than 35 need to prove they have had past membership or a monthly Late Joiner Penalty is imposed. The penalty is added to your monthly contribution indefinitely and is determined by this table:

No. of years applicant was not a member of a medical aid since age 35Penalty %
1 – 4 years5%
5 – 14 years25%
15 – 24 years;50%
25+ years75%

As you can see, it is important you make the effort to identify (and prove) all your past healthcare membership. You do this by providing current membership certificates or an affidavit attesting to your membership.

How does a medical scheme pays claims?

The monthly premium you pay, is pooled and it is from this collective fund that claims for medical expenses are paid. A medical aid plan pays claims either:

What is 100% or 200% of medical aid rates?

claimsAt the beginning of the year, medical schemes meet with providers to determine a basic rate for services.

But, private providers can charge any fee (often up to 500% of scheme rates) as long as patients feel they are getting value for that price.

A list of recommended tariffs (Reference Price List or RPL) for specific in hospital treatments and procedures exists and medical aids generally pay up to 5% more than these published tariffs. These are the Medical Scheme Rates.

Schemes use claims experience and the amount of funds they have, to work out percentage payouts for scheme rates. Lower cost plans usually pay 100% of scheme rate for hospitalisation. Other (more expensive) plans pay 200% to 300% of these rates.

Plans with linked (network) providers can pay cost in full, irrespective of these scheme rates.

It is a difficult exercise to balance the value of these rates, as the pool of funds they have, is finite - made up of member contributions and other investments. If they overpay for certain procedures, then the solvency and overall claims playability of the medical aid scheme can be affected. If they underpay members are likely to resign and join other schemes!

So, medical aid rates are based on what members can really afford and not what providers may charge.

In an attempt to control the ever-increasing cost of medical aid, many schemes are also introducing co-payments for certain services, hospitalisation, MRI and CT scans, specialised dentistry etc.

A co-payment is an amount you pay when having one of these treatments or procedures.

Go here for more information.

top-upPrivate healthcare providers can charge up to 500% of medical scheme rates.
Medical aids add procedure co-payments as well.
These are significant concerns for medical aid members.

Safeguard yourself against these potential threats, by joining a GAP or top-up insurance plan.

This separate insurance acts as a protective layer, covering most in-hospital claim shortfalls and any co-payments.
It is a vital safety net, ensuring you have adequate coverage for medical treatments without bearing the full burden of unexpected costs.

Protect yourself from soaring medical expenses by bridging the gap between medical scheme rates and the charges imposed by private providers.

dentalSpecialised Dental treatments can be extremely expensive!
The costs of braces, root canal, implants and so on, can run into thousands of rand. Most treatments are done out of hospital, so are funded from your savings. That can result in less money available for other medical needs and family limits being used on one member only!

Dental treatment is something we all need and it is vital you consider the Best Dental Insurance Plan in South Africa.

No Medical Aid or have a Hospital Plan only?
This plan will help you meet the high costs of both normal and specialised dentistry!

What are prescribed minimum benefits (PMB's)?

Medical Aids must ensure that you have access to certain minimum health services, irrespective of the type of plan you join. These are known as the Prescribed Minimum Benefits (PMB).

They must pay for the diagnosis, treatment and care of:

A scheme can require you to use only listed medicines and certain Service Providers (Networks) when covering PMB conditions.

(Please note that Prescribed Minimum Benefits may be refused during the waiting period, if you have never belonged to a scheme or did not belong to a scheme for at least 90 days before you applied for new membership).

What chronic medicines must a medical aid pay?

chronicIn terms of the PMB guidelines, schemes have to pay for 25 PMB chronic conditions.
The costs for the diagnosis, treatment and care of these listed conditions, no matter what medical aid plan you are on.

If you have a chronic need, outside of these PMB conditions, you may need to look at a plan with higher chronic benefits to get cover.

Every plan has a list of medicines - called a formulary - which they provide. Certain schemes also allow for medicines not on that list, but you will get a co-payment if you use them.
The scheme may also require you to use a designated provider.

You must make sure you register for chronic benefits or the scheme will use your savings to pay for chronic medicines!

Schemes offer specific care programmes to help members live with certain chronic illnesses like HIV, Oncology, Diabetes, Cardio and Mental Health. You register for a programme and then have access to additional, relevant benefits that may be offered.

We can help you if you have any concerns.

How does a medical aid pay for cancer benefits?

Most schemes offer a separate benefit for oncology.

Some plans only pay for PMB-related cancer treatments and others have a limited amount for non-PMB care. Other plans may offer unlimited benefits, but have a co-payment after as specified limit is used. Lastly, there are plans that have unlimited oncology, but only from network providers.

Most schemes apply Independent Clinical Oncology Network protocols. ICON is a organisation of oncology specialists and offers management and treatment for oncology patients.

A few plans offer benefits for specialised oncology medicines, but those plans are very expensive.

What is preventative care?

chronicSchemes offer a range of preventative care benefits in order for you detect (and then treat) medical conditions early. By doing this you will get the best care as soon as possible.

Benefits such as ‘flu injections, blood glucose and pressure tests, mammograms, Pap smears and prostate screenings, all paid for by the scheme and not from your savings!
Some even offer child growth assessments and milestone tracking!

You may have to use network providers but, can get a range of benefits such as GP, dental and screening benefits paid.

You should investigate the value of these benefits, as they will aid in preventing more serious (and costly) conditions developing in years to come!

What medical aid terms mean?

Your very first step is to understand what the various medical aid terms mean.
This is critical to your understanding of what you are buying.

Because there are so many, there is a separate page listing Medical Aid Terms.

What are risk and savings of a medical aid?

medical aidThere are 2 main area of funding in a medical aid.

1. Risk pool - Part of your contribution goes into this funding pool. It is designed to pay claims for all members of that plan.
This allows for cross-subsidisaton - where members at higher risk of having to claim, are subsidised by those with lower claims risks.

The size of the fund gives an idea of future of claims, allowing the scheme to spread the risk they face, hopefully allowing for lower premiums and making that plan more affordable for you and I.

2. Savings pool - If you have a plan with savings, then up to 25% of your premium goes into this fund to help you pay day-to-day healthcare costs. These funds are yours to help pay for nearly all your medical costs - except PMB's.

The scheme will advance you (interest-free) up to a year's worth of these savings at the beginning of each calendar year. You can only use these funds to pay medical costs (not co-payments) and you cannot "top-up" a fund when savings are used up. You can roll over any balance at year-end.

Because it is your money, there is no cross-subsidisation allowed and once your savings are used, you either pay further costs yourself (the self-payment gap), have access to additional benefits or use a threshold benefit, which the more expensive plans have.

This savings can be seen as as "compulsory loan," funded by way of added amounts to the premium! Should you not need to spend the funds, you have no choice but to pay towards the savings. That is unfair!

There is an innovative scheme that "parks" the savings account until you spend from it. Only then do you re-pay what you spend - over the next 12-months (interest-free).

Your next and subsequent premiums increase slightly until the loan is paid.

This is the only scheme that allows you to control your medical aid premium!

More expensive plans offer a safety net (threshold benefit) which pays further claims, once your savings are used and your claims have added up to a pre-defined amount.

Plans can pay certain day-to-day costs from the risk portion of a medical aid, thus extending the buying-power of your savings and here is one that pays Dental costs from Risk!

bestmedicalaid.co.za can help you identify and join one of the top medical aids in South Africa!

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

We will offer you the best help at no cost!

income protectionMedical aid pays healthcare costs.
What if a disability stops your income?

peter pyburn brokerpeter pyburnPeter Pyburn - Authorised Financial Services Provider, fully licensed to render financial services since 1991. Death and Disability Planning; Retirement Planning; Investment Planning; Healthcare and Estate Planning. More...


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Last update: January 16, 2024