- Above-threshold benefits on comprehensive medical scheme options offer you safety net from high medical expenses when your medical savings account is depleted.
- However, when your savings account is depleted and before the above-threshold benefit kicks in there is usually a self-payment gap when you must pay your own claims.
- The self-payment gap may higher than you expect if the scheme rules state that only claims for essential expenses count towards the threshold.
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Top-of-the-range medical scheme options may offer you cover for your claims when you have depleted your medical savings account. This benefit is known as an above-threshold-benefit.
Many medical scheme options offer cover for day-to-day healthcare expenses through a medical savings account. Some of your contributions are channeled into this account for you to spend on general practitioner visits, acute medicines, optometry and dentistry.
Read more: What is a medical savings account?
But medical savings accounts are often not sufficient for your needs, especially when you or a family member have a serious health condition.
An above-threshold benefit gives you the ability to claim from the scheme when you have used up your medical savings account – offering a safety net from high claims. However, it is not that straight forward.
There is a self-payment gap
Schemes set the threshold as an amount that is higher than what you will contribute to your medical savings account for the year.
Once you deplete your savings account and until you reach the threshold, you have to pay the claims yourself.
The difference between what you contribute to your medical savings account and the threshold is therefore called the self-payment gap.
You need to submit all your medical expenses to your scheme even if you are paying for them yourself, in order for it to determine when you have reached threshold.
The gap may be wider than it seems
Schemes that offer above-threshold benefits, typically have rules about which claims count towards that threshold.
These rules apply both to the claims that are paid from your savings account and to the claims you pay for yourself when you are in the self-payment gap.
For example, when adding up your claims to see if you have reached the threshold, a scheme may only use claims paid to doctors and other healthcare providers up to the medical scheme rate.
If you are using a provider who charges more than the medical scheme rate, your claim may, depending on the rules of your scheme, be paid from your medical savings account, but only a portion of it will count towards you reaching the threshold.
Your scheme may also only count the cost of medicines you have claimed up to the cost of medicines on the scheme’s medicine formulary or list of medicines. If you use more expensive medicines, the additional cost may not be included when your claims are totalled to see if you have reached the threshold.
Your scheme may also not count claims for over-the-counter medicines towards the threshold even if the scheme allows these to be paid from your medical savings account.
Certain claims may be regarded as non-essential and may not count towards the threshold.
Above threshold rules
Once you reach the threshold and qualify for above-threshold benefits, you may find your scheme has more rules about the claims it will pay.
- Doctors and other providers will only be paid at the medical scheme rates.
- Medication will only be paid for if you use generic medicines and medicines on the scheme’s formulary.
- Some benefits have sub-limits. For example, optometry, dentistry, psychiatrist and psychologist benefits may have their own limits. Appliances, such as wheelchairs and hearing aids may also be subject to their own limits.
- If your scheme imposes a co-payment on, for example, an MRI scan, you will not be able to claim this from the above-threshold benefit.
- Some services, treatments and medicines are excluded altogether – for example chiropractics or over-the-counter medicines.
An above-threshold benefit is like a safety net. But if you have never accessed it – perhaps because you never get through the self-payment gap - you should consider whether you really need this benefit.
You need to analyse the cost of paying higher contributions to belong to an option with this safety net and the benefit – in terms of claims paid – you get from it. Ask your medical scheme broker to help you as scheme option cost-benefit analyses are not easy if you are not familiar with detail of each option.
You may be better off paying for a medical expense – even on-going medication – yourself – rather than paying the higher contributions.
But also be aware that more comprehensive options typically also have other richer benefits.
This article was first published on SmartAboutMoney.co.za, an initiative by the Association for Savings and Investment South Africa (ASISA).