What to consider when choosing between full medical aid and a hospital plan

Charné is a Registered Tax Practitioner and has written several magazine articles with financial related themes since 2006. She is a known finance and tax expert working as an adviser at lemons into lemonade financial planners cc.

There are a wide variety of medical insurance products available in South Africa.  Today, I will focus on the two most popular ones:

1.    Medical aid

A medical aid is a registered medical scheme in South Africa of which you and your family can become members of at a certain cost per month.  You can only be a member of one medical aid at a time.  Every medical aid in South Africa have a wide variety of plans available.  You can be a member of a medical aid until you die as long as you pay the premium every month.  The more benefits the medical scheme offers you,  the more expensive it will be per month.  

2.    Hospital plan through a life insurance company

These products generally offer a fixed amount for hospitalisation per day and cover for surgeries or procedures that are pre-determined on a list.  The benefits stop at a certain age,  for example 65 years and with some policies you can then get a cash payout.  

Why take out a medical aid?
Becoming a member of a registered medical scheme gives you and your family the assurance that you are either fully or at least partially prepared for medical emergencies.  It helps you not to make debt when such an emergency arises.  You can also get access to medical treatment quicker because you don’t first have to pay before you can receive medical help.  It normally pays hospital accommodation and surgeries or medical care in the hospital.  Certain medical schemes also pay certain medical costs after you leave hospital like follow up doctor visits,  physiotherapy or even nursing.  By being a member of such a scheme,  you have access to privately owned hospitals and you don’t have to go to state hospitals.  

How to choose a medical aid

Your choice of a medical scheme will be generally determined by 7 factors :

1.    The medical scheme your employer has chosen for all its employees.  You can still choose the plan that you and your family need

2.    What your employer helps to contribute to it

3.    What part you must pay.  Here your own budget and what you can afford is important to consider

4.    The size of your family

5.    The health needs of you and your family

6.    Your age (you will pay more than the normal contribution if you join after a certain age)

7.    Your medical history.  If you have not been on a medical aid before,  certain existing medical conditions may be excluded for a year.  Hospital cover is also mostly excluded for the first three months,  unless it is an emergency which means that you will die if you don’t get the proper medical treatment.

Most medical schemes increase with approximately 9% to 14% a year.  The cost of medical treatment increase every year and that is why your medical aid may have to increase their contributions with more than what your salary increases with each year.  

READ: Saving for retirement and your children’s education: which comes first?

Basic cover up to full cover

Medical aid membership can be divided into 4 types of plans (from cheapest to most expensive):

1.    Hospital Plan. This is a basic medical aid that only covers you and your family for medical costs incurred in a hospital.  

2.    Hospital Plan plus Savings Account. The second choice is where you have a hospital plan linked to a savings account of a fixed amount per year.  The savings account can be used for costs outside of the hospital and when it’s used up,  you will have to pay the rest of the out-of-hospital claims yourself for the rest of the year.

3.    Hospital Plan plus Savings Account with Threshold. The third choice is very similar to the second choice but it has a bigger savings account.  If your own basic savings account is used up,  you will continue to pay out-of-hospital accounts yourself but only up to a certain fixed limit.  Claims over that limit will then be paid by the medical aid.

4.    Comprehensive Medical Aid. The last choice is what we refer to as “full” plans.  They normally cover most medical expenses.

On all these plans,  there are choices to use your own doctors or the doctors on that medical scheme’s network.  With some treatments,  you may also be required to make a co-payment before the medical aid pays the rest.  

The good news is that regardless of what medical aid you’re on,  there are certain minimum prescribed benefits that all of us have.  These procedures will therefore always be covered.  Also enquire from your medical aid about any chronic medication that you take.  It may just be covered under these minimum benefits.  (Chronic medication is medicine that can lead to death or serious illness if you don’t take it as prescribed.)

Limits on certain medical procedures or treatments

When you are a member of a medical scheme or even when you have a medical policy through an insurance company,  it does not mean you are fully covered when one of the family members is admitted to hospital or when they are treated by a medical professional outside of the hospital.  You need to make sure what the annual limits are that is applicable on your membership so that you are not caught unaware in case of a medical emergency.  

Here are three examples of how annual limits can work :

1.    There is a limit of R1,000,000 on hospitalisation per year for the whole family but it does not matter who in the family uses that limit.
2.    Each family members is limited to dentist work done of R3,000 per year but the limit for the whole family per year is R9,000.  If you are 5 members in the family who all want dentist work done in the same year,  each will be limited to only R1,800 otherwise you will exceed the family limit of R9,000.
3.    Cancer treatment is limited to R250,000 a year for the family on the medical scheme.  If the family has a gap cover plan that also provides R70,000 for cancer treatment,  then a total of R320,000 will be covered.  If the total costs were R350,000,  then it means you will have to pay R30,000 of the total expenses yourself.

If you are not satisfied with the limits your medical aid offers,  you can take out gap cover or a hospital plan for additional cover.  You can also stay with your current medical scheme but move up to a better plan within that scheme.  Or,  you can also move to another medical aid.

READ: The local and lekker way of saving money

Programmes that reward healthy living

With some of the medical schemes,  you can add a lifestyle rewarder programme on which you can earn  points if you live healthy.  The points can then be used in various ways like getting discount on your life and disability policies with the same company.  With these programmes you can also get cheaper flights,  accommodation,  movies and discount on various shopping items like cameras and children toys.

To be healthy means you eat healthy foods,  eat the right quantities,  don’t smoke,  exercise regularly and manage stress in your life.  Part of living healthy is also to be pro-active which means you don’t wait until something is wrong before you go to the doctor.  Regular visits to medical professionals help to check your general health and that your blood pressure,  cholesterol and weight are under control.

Choices,  choices,  choices.

There are many medical schemes in South Africa and each has more than one plan to offer.  It may be a good idea to use a broker who specialises in medical schemes to help you decide.   

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