What to do about Your Medical Aid Plan
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Healthcare in South Africa is so expensive that many members are looking for ideas on what to do with their medical aid. And those wishing to join medical aid are also finding it as difficult to choose a plan.
Frequently Asked Questions: What to do about your Medical Aid Plan
1. What Are the Biggest Financial Risks in Healthcare?
There are 2 key areas of financial healthcare risk we face, hospitalisation and dental expenses. Private healthcare in South Africa is essential as the state system is dysfunctional. Private hospitalisation Is extremely expensive and, while normal dental treatments can be self paid, specialised procedures like implants are very costly. Joining an in-hospital only benefit plan will secure private hospital treatment for you and a comprehensive medical aid will help you meet these unforeseen, high cost medical expenses both in and out of hospital.
2. How Can I Reduce Healthcare Costs Without Sacrificing benefits?
A hospital only benefit medical aid is cheaper than a comprehensive medical aid. You can also consider the joining a plan that requires the use of network hospitals, with discounted premiums and excellent benefits. There is also a hospital plan that will also cover essential dental benefits.
This plan addresses your areas of greatest medical financial risk.
3. Why Should I Consider an In-Hospital Only Medical Aid Plan?
An in hospital only plan provides you with security of admission to private hospitals and the ability to immediately pay for the best care available. It is a cost-effective way of providing immediate funding for hospitalisation. Because you self- pay your day-to-day costs, the premium is less than that of a comprehensive medical aid. But you are still insuring against your highest medical financial risk, private hospitalisation. You can join a hospital plan with the option of a day-to-day savings fund that you only repay when you spend from it. In this way you create a safety net should you have unexpectedly high out of hospital costs.
4. What Factors Should I Consider When Choosing a Medical Aid Plan?
You should identify whether you need a comprehensive medical aid - with in an out of hospital benefits, or simply a hospital plan where you self-pay day-to-day costs. You need to identify how much you can afford as a premium. You will need consider your future healthcare needs like hospitalisation, day to day treatments and any chronic illness medication needs. When considering network provider plans, you need to investigate the ease of using those linked providers.
You should, at least, join an in-Hospital only benefit plan to cover your greatest threat of high medical costs at a very affordable premium.
We are all too aware of the high-cost of healthcare cover today and in the future it will be even higher.
Premiums have increased by between 10 and 12% in the recent past and going forward, will still increase at a rate higher than that of inflation.
We live in a country where medical aid is not a luxury, but a necessity and without a healthcare plan, you will be in serious trouble!
Here are ideas on how to keep your costs down, yet have the best medical cover you can afford.
The risk of high medical expenses
There are two areas of high financial risk we face when it comes to medical expenses, private hospitalisation and dental expenses.
Private hospitalisation is non-negotiable in South Africa. Relying on the state for critical care is not recommended and private care is a necessity.
The extraordinary financial pressure we are under - from a poorly performing economy and the need to pay ever-increasing costs – has resulted in people having to severely cut their spending.
Unfortunately, healthcare insurance is one of the first casualties!
Medical aid is really an insurance plan, designed to help you meet the high cost of medical treatment.
So, we should consider medical aid in the same way we would any long or short-term insurance cover we buy.
We don't have car insurance and because we may suffer a puncture or need an expensive service.
We have car insurance for a major accident or theft. And so it should be with your medical aid.
You need to ensure that you can get access to the finest private hospitalisation available when you need it.
Dental treatment is generally the next high cost for most people.Normal dentistry can be costly, but specialised dentistry expenses can be huge. 2 implants can cost close to R 50,000!
A comprehensive medical aid will help you meet these costs.
Other day-to-day expenses we may face, can be paid as and when we use them. I have yet to hear of a member going bankrupt because of a chemist account.
However, a month in ICU, then time in high care for a family, will be financially devastating without a medical insurance!
Consider either of these excellent ideas for your medical aid plan ...
1. A private hospital only medical aid plus dental benefits plan.
Unlimited in-hospital benefits, full choice of provider and essential dental cover (in and out of hospital).
Premiums from R 2,130 pm
2. A private hospital only medical aid with a safety net fund for high day-to-day costs.
Unlimited in any hospital cover and a savings fund available should you have high out of hospital costs.
And you only start paying back any savings you spend - interest free and over the next 12 months - once you spend them. You have control over the premium you pay!
Don't spend savings and you have a hospital plan - but with the safety net of day-to-day money should you need it!
Premiums from R 2,201 pm with R 6,540 in savings for day-to-day costs.
A choice based on your needs and affordability.
Your Budget. Facing such high healthcare plan costs, a budget becomes vital.Deciding how much you can afford for your medical aid is a must!
A medical aid hospital only benefit plan costs less than a full, comprehensive medical aid.
This is because, instead of paying a monthly amount to the comprehensive plan, (that is then used to pay for your out of hospital costs), you self-pay these incidental and day-to-day expenses.
Often, the amount of the reduction (compared to a comprehensive plan), if saved, results in a greater fund for out of hospital expenses, than the funds within the medical aid!
And you have full control over the savings.
You may have a concern because the medical aid does advance the savings upfront at the beginning of a year, whereas your savings take time to grow. However, over time, self-funding has greater benefits for you because:
- You are not restricted as to what you can buy with your money, whereas with a medical aid you are.
- You can stop paying into the fund when you feel it has a large enough balance.
- You can use the money for any expense you need to meet – not only medical costs (although that is ONLY what it should pay for!)
A private hospital only medical aid plan - with unlimited benefits, full choice of provider and including essential dental expenses - should now be your number one goal.
Here's a plan is a plan that pays no annual limit private hospitalisation and essential dental costs - with a provider of your choice!
By joining this option, you are ensuring you can access the finest hospitalisation and pay for essential dental care, because the plan pays basic dental benefits, further reducing your second highest medical risk - dentistry.
The plan also offers these excellent advantages:
- Low contributions, from R 2,130 pm!
- You have freedom of choice and can use any provider you want to.
- The scheme is financially stable and solvent, with an excellent claims paying record!
- It is rated as one of the best value-for-money medical scheme benefit options in South Africa!
- It has had the lowest premium increase over the last 10-years!
If you are not keen on the self-funding element of a hospital only plan, there are other ideas you can consider.
1. Discounted premiums
Medical aids have differing levels of in and out of hospital benefits within their plan options.
Plans pay in-hospital costs at different rates – medical aid, 200% or even 300% of medical aid rates.
Normally, this only affects private providers fees, like surgeons, anaesthetists etc. as ward and theatre fees are paid in full.
A plan paying at say medical aid rates can be substantially cheaper than one that pays at 2 times scheme rates.
However, private providers can charge what they want and often have fees up to 500% of medical aid rates!
What can you do in to meet these high fees?
You can choose to use providers linked to the medical scheme, because they charge what the scheme pays, so your claims are paid in full.
Some schemes offer discounted premiums depending upon where you are prepared to get your chronic medicines.
Use linked chemists or the state and you get lower premiums.
2. Networks and listed hospitals
If you are prepared to use listed hospitals (outside of emergencies) and networks of out of hospital service providers, you get premium discounts!
Many network plans also pay linked specialists in full because the medical aids can influence costs through these networks and any saving is passed onto you in the form of reduced contributions.
3. There are entry-level plans available, where the premium is based on your income.
These plans offer you the ability to get life-saving or life-threatening cover at a network of private hospitals - for a very reasonable premium!
4. Out of hospital savings fund.
This fund is made up of additional monthly contributions you pay. It is your money!
If you are healthy or can self-pay some of your day-to-day costs, you can join a plan with a reduced savings fund as the contributions are less.
The only concern, is whether you have “cash-on-hand” to pay for services when you need them and your savings are used.
A revolutionary new savings concept has been launched by a leading medical aid.
Medical aids increase your contribution by a monthly amount and allocate it to your savings fund, irrespective of whether you use those savings or not!
This scheme allows you to repay the savings you use but, only from the time you spend them!
In this way, your premium will stay at a reduced amount (effectively a hospital plan) until you spend from the savings account.
Then your next and subsequent premiums increases by a savings payback amount.
If you never use the savings, you effectively have an in-hospital benefit only plan, but with the safety of being able to access monies should you need them.
5. More expensive medical plans offer a threshold benefit.
When the day-to-day savings account is used and claims have accumulated to a predetermined amount, this threshold benefit pays for further day-to-day claims that year. However, this benefit is expensive!
In many cases, members do not use the threshold benefit in a year, as they do not accumulate sufficient claims to qualify for the benefit or if they do, they access the benefit towards the end of the year and so make very little use of it.
It is a waste of money.
You need to analyse your annual out of hospital medical costs and any potential need for cover in the following year, to justify the need for buying threshold cover.
It may well be that you are better off saving that threshold premium in your own savings fund. Or simply reducing your overall premium?
We can assist you with this.
6. Chronic cover - A high need for chronic medication may determine your choice of a plan.
PMB benefits, as enforced by the Medical Schemes Act, cover 27 illnesses.
These are chronic medicines every scheme must pay for and the schemes can dictate where you source these medicines.
Medication for chronic illnesses that fall outside of the PMB benefit is covered through more expensive plans.
One plan offers premium discounts depending upon where you source your chronic medicine.
With no chronic medicine need, the discount can be significant!
Your lifestyle affects the plan you should choose.
A young, healthy member generally only needs an in-hospital medical aid option.Leading more active lives, they are at higher risk of accidents that may require casualty or hospitalisation.
The occasional visit to a GP or dentist can be self-funded.
Most younger members begin with a hospital plan, changing to higher cover plans as they grow older and start a family.
Maternity benefits are paramount if you are starting a family.
Medical aids allow you to upgrade plans once a year.
However, there is a scheme that allows you to upgrade your plan at any time you suffer from a life-changing event and pregnancy is one such event! With this scheme, you can join a lower level of benefit fund, safe in the knowledge that should you need higher cover for a qualifying event, you can change plans at any time.
When you are planning a family, your day-to-day expenses will rise and a plan offering help with these costs may be an option.
There are a wide variety of hospital plans with built-in day-to-day saving funds, to help pay for out of hospital costs.
Part of your premium funds this benefit.
Although the money is yours, you can only use it for medical expenses as defined by your plan.
In this way, there is no undue loss of savings and unused year-end balance is transferred to the next year.
Some plans have a limited safety net when savings are used.
You can use the services of network providers and the scheme pays for them.
For the more mature member, who may not have high chronic or general health concerns, you can consider a hospital plan with a savings account. You will have the best hospital cover and protection should you require help with increased day-to-day expenses.
If you have a threat of high out of hospital needs, then you should consider a comprehensive plan.
Private 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.
Protect yourself against these potential threats, by joining a GAP or top-up insurance plan.
This separate insurance will cover most in-hospital claim shortfalls and any co-payments. It is a vital safety net, ensuring you have adequate benefits 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.
Specialised 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!
We do not promote hospital plan insurance!
Medical aid and insurance plans are very different products.
Please see our comments on these differences here.
The hospital and dental benefit plan will offer you the finest any private hospital cover and essential dental expenses cover and at a very affordable premium - way less than any other medical aid!
Please request a quote to justify this statement!
Day-to-day benefits are paid from your own savings fund in a medical aid.
Although this is your money, you cannot do anything with the funds, except pay for medical costs through the medical aid.
And you can only access any balance 6-months after leaving your medical aid. Not ideal!
Why not consider buying an in-hospital only medical aid?
Then, add a savings account that you only use for medical costs, creating your fund for day-to-day medical costs.
The combined premiums are considerably less than a comprehensive medical aid with mostly equivalent benefits.
And you control your savings account!
OR, look at the Fedhealth flexiFED plans.
These plans are essentially in-hospital only plans. But, they do have the option of using savings for day-to-day costs - that you only repay once you use them.
It can be a complicated exercise to work out whether you should change your medical aid plan.
You need to weigh-up your health risk against the various plan benefits, then try to find a plan that best suits your needs and budget.
Please remember that a good hospital plan will cover your area of greatest medical financial risk and given the certainty of rising prices with health care this is fast becoming the plan option of choice!
We are here to help you, often at no cost, every step of the way!
Talk to me .... I am here to help you - at no charge!
Send me your questions and concerns. I'll answer them for you.
083 655 2164
You must consult the schemes/company product brochures and rules for comprehensive benefit descriptions.
Medical aid pays healthcare costs.
What if a disability stops your income?
Peter 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.
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Last update: July 20, 2024