Medical aid: an alternative

2012-02-25 10:10

As medical cover costs increase, many people are unable to afford even an entry-level option on a medical scheme.

There are other options in the market that provide at least some cover for basic medical needs. While people may be familiar with hospital plans, health insurance products sold through the short-term insurance industry are not as well known.

The cost of healthcare and medical scheme increases well above inflation have led to the emergence of a new type of short-term health insurance product in South Africa that is ideally suited to new job entrants or lower-income earners.

However, the fact that so few healthcare consultants are licensed to sell the product means it is rarely offered as a solution.

According to Clayton Samsodien, managing director of Genesis Capital’s healthcare subsidiary – Genesis Healthcare Consultants – there has been a proliferation of new low-cost, short-term healthcare insurance products in South Africa.

“Some of these products are offered by well-known brands, but they are rarely highlighted as options to consumers, as so few consultants are legally licensed to provide advice regarding them.”

This is because the products are governed under the short-term insurance act and most advisers who work in the healthcare space are not registered to sell short-term insurance products.

Samsodien says a consultant could take the necessary examination, but in the current regulatory environment we are unlikely to see consultants voluntarily opting to take more exams.

“This can be the ideal product for those who cannot afford full medical aid or those who deplete their day-to-day benefits during the year.

“Cash-strapped consumers do not have to resign completely from medical cover due to affordability and, through healthcare insurance, can still obtain access to quality doctors and primary healthcare institutions, particularly as we wait for cover under the National Health Insurance scheme to be implemented,” says Samsodien.

The pros and cons of short-term health insurance

The biggest disadvantage of belonging to a non-medical scheme product is that you lose the protection provided by the Medical Schemes Act, says Alexander Forbes’s Butsi Tladi.

The most important provision is unlimited cover for prescribed minimum benefits on all medical schemes and options.

Health insurance products also have stricter protocols with regard to some treatments and may have additional exclusions, says Tladi.

Samsodien argues that prescribed minimum benefits are the reason medical schemes are becoming unaffordable due to the cost of providing these benefits.

Some of the non-medical scheme products have a maximum age for membership so as you get older you will not have cover. When you try to apply for medical aid membership later in life, you will face penalties through higher premiums.

Some treatments will be approved, some not, and although you may get basic chronic, medical and dental care, it doesn’t mean you can access top-of-the-range cancer treatments, for example. Some plans exclude operations like hip replacements or organ transplants. However, Samsodien says some of these options pay out a specific rand amount for these treatments.

Tladi says you will need to have a medical reason to opt for a caesarean section on a low-cost health insurance plan, so if you’re planning to have a baby, ask what your options are.

You will not receive a tax concession as it is not seen as medical aid cover, although some companies will still subsidise or pay the full contribution.

The upside is that it provides very affordable cover for people who want protection but cannot afford a medical scheme. For about R250 a month, you can see a doctor as many times as necessary during the year and certain prescribed medication will be covered too, says Samsodien.

Some of these plans provide cover for basic X-rays, blood tests, basic dentistry, glasses, and emergency and trauma care.

Be aware though that you must go to designated service providers that are part of the healthcare network, so if you live far from these and your travel costs add up, it may not be worth it.

Samsodien says some short-term healthcare products also offer a range of bolt-on benefits, including cover for hospitalisation.

“This means consumers can take a baseline product such as a hospital plan offered by medical schemes, add day-to-day benefits and hospital gap cover offered by short-term insurers, and structure their own plan with the advice of an accredited consultant.”

As an example, a family – principal member, spouse and two children – could easily spend R6 500 a month on a comprehensive medical aid. By combining the correct elements, the same family can save R3 200 a month, representing a total saving of 49%.

However, it is best you get advice on this to ensure you have the correct cover in place.

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