Your money, your lifestyle – Get the most from your medical aid

2011-10-22 09:58

As medical scheme premiums increase each year beyond inflation and consumers’ budgets come under pressure from food, higher electricity and transport costs, a trend has arisen to search for cheaper medical cover.

Consumers are now moving away from options with high day-to-day savings. Consumers want options that provide good hospital and risk cover, while funding day-to-day expenses from their pockets.

The move is logical as medical cover should be seen as an insurance that covers the consumer for large and unexpected events which could wipe one out financially rather than be used to buy supplements, for example.

Of your monthly premium, about 15% goes to non-medical funding costs like administration, so it works out cheaper to fund your day-to-day expenses from your pocket.

But ensure that you have proper cover in place for large expenses such as medical tests, chronic medication and hospitalisation.

Legislation requires that all medical schemes provide members with access to certain minimum health services regardless of the benefit option they have selected.

These are known as prescribed minimum benefits (PMB). And as a result, medical schemes are not able to provide members with a standalone hospital plan.

But the more innovative medical schemes are finding a way to meet the changing needs of consumers. When choosing your medical scheme and option, make sure you are getting the best value for money.

1 – Opt for a network

One of the major trends of medical schemes is to provide members with the choice of a network of doctors and hospitals.

By selecting to be on a network, the member uses doctors and hospitals that are contracted to the medical scheme and premiums can be as much as 30% lower even on high-end options with comprehensive cover.

In some cases the scheme will continue to pay the general practitioner (GP) costs even if your savings have been depleted, as long as you visit GPs associated with the scheme.

All medical schemes offer entry-level products to lower income earners which focus on hospital cover and are also linked to specific service providers.

The premiums are determined by the member’s income and the day-to-day benefits are more limited. They still offer comprehensive hospital cover for emergencies at selected private hospitals, but generally do not cover hospital admissions for more elective procedures such as, for example, elective caesarean, dental and nasal surgery.

2 – Find out about risk cover

Your medical scheme pays out of different “pockets”. One is from risk cover – usually for major events.

Here, the fund is cross-subsidised between members so even if you only pay R36?000 a year into the scheme, it will cover all. This is the insurance portion of the scheme.

The other “pocket” is day-to-day savings – for doctor’s visits, blood tests and medication. When this runs out you no longer have cover for day-to-day expenses.

So what a medical scheme pays for from risk versus savings is an important issue. Medical schemes like Fedhealth, Momentum and Liberty Health have extended the cover that is paid from risk rather than day-to-day savings.

For example, if you go to the emergency room with a trauma like a broken leg or stitches, these schemes will pay from your risk component rather than depleting your day-to-day savings account.

Momentum Health has extended this to include further treatment as a result of a trauma. For example, if you are in a car accident and require physiotherapy for several months afterwards, this would be paid from your risk component and not your savings.

Some schemes also pay for preventative tests from risk cover such as yearly health assessments, cholesterol tests, pap smears and yearly dental check-ups. They may also pay for oral contraceptives from risk cover.

Fedhealth and Liberty Health pay for MRIs and pregnancy scans from risk cover while other schemes may consider this a day-to-day procedure.

3 Does it pay to be healthy

3Medical schemes that have healthier members are more sustainable and will have lower increases in premiums. So a scheme that encourages its members to be healthy will benefit them in the long run.

It is also a reward as legislation prevents schemes for discounting premiums for healthy members. Some schemes will encourage members to go to the gym, have preventative tests and also, if you have a chronic condition, to follow a proper health plan.

Discovery Health uses its Vitality scheme to encourage wellness and rewards members with cheaper movie and plane tickets.

Momentum Health’s health returns, which you can join at no charge, actually pays cash into your medical savings account if you undertake a yearly health check and you exercise regularly.

A couple can earn up to R3?600 a year which can be used to supplement their medical savings. These savings can be used for any medical procedure even those that are cosmetic such as eye laser surgery.

If you join the Momentum multiply programme, this amount can increase to R5?400 a year.

4 Are chronic conditions covered?

4There is a third “pocket” which schemes pay out from and this is for chronic cover. If you have a chronic condition, all related expenses are paid from your chronic cover and do not affect your day-to-day savings.

So if you have a chronic condition it is important that you make sure you have good cover. All schemes have to cover you for 26 conditions as part of the PMBs (prescribed minimum benefits).

This includes diabetes, cancer and HIV. However, in order to prevent people from signing up when they are ill, there are waiting periods and new members can be charged a higher rate. This is a good reason to join a medical scheme while still healthy.

Legislation requires that medical schemes cover all the costs of medication and associated care of the 26 chronic conditions at whatever cost charged.

Schemes are challenging this as they are finding some doctors are overcharging as they know the medical scheme will pay. The schemes have asked for clarity as to whether they must pay at cost or in line with the schemes’ rates.

Some schemes such as Liberty Health and Fedhealth have options that extend that cover for additional chronic illnesses. Liberty has cover for families with children that suffer from acne, eczema, attention deficit disorder or allergic rhinitis.

Some of Fedhealth’s options include cover for anxiety-related disorders. So if you have a chronic condition that falls outside the prescribed conditions, it is worth investigating.

5 How do I fund savings?

If you opt for a scheme that has a lower day-to-day savings allocation, you still need to make sure you have savings set aside in order to meet daily doctor visits. This is especially important if you have children as they tend to go to the general practitioner more frequently.

Momentum Health has introduced HealthSaver for members who want to supplement their savings outside of the scheme. For example, if you contribute R200 a month to the savings fund, Momentum Health will lend you the full R2?400 for the year if you have unexpected costs early in the year.

The advantage is that these savings do not incur any administrative charges; they can roll over to the next year; and can be used for any medical procedure, including cosmetic surgery.

6 Why you need medical aid

Young healthy people often wonder what the benefit of a medical aid is as they do not see the value of it. However, not having a medical aid exposes you to significant risks.

Butsi Tladi, head of Alexander Forbes Health, says they are seeing a marked increase in the number of young people diagnosed with serious illnesses such as cancer.

Accident rates are

also much higher among young people. If you are rushed to a private hospital due to trauma, it is not uncommon for the hospital to ask for R40?000 upfront payment before admitting you.

You also need to build-up a “health record” as medical schemes are allowed to institute exclusions and late joiner penalties.

According to Tladi, most schemes will implement a three-month general waiting period for new members. However, if the member has been on a medical scheme for two years, any illness which falls under the prescribed minimum benefits will be covered.

If you have not been a member of a medical scheme previously, the scheme may also impose a 12-month waiting period on any pre-existing conditions.

Moreover, if you are over the age of 35 and have never had medical cover, you will be charged a late joiner penalty and you will pay a higher premium. This is to prevent people from only joining once they are ill.

Tladi’s advice to younger consumers is to take out basic cover that provides for serious illness and accidents so that they are covered if things go wrong.

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