Medical Aid Or Medical Insurance – Which Is Best For Me?

Many South African’s feel the economic impact of the pandemic, which has ultimately affected their pocket. People are forced to make difficult decisions in order to rearrange their finances to suit their current financial constraints.  Many may entertain the notion of cheaper alternatives to save money and even cut costs altogether. Yet, there are many things in life where cheaper is not the right option.

CEO of medical aid scheme Profmed, Craig Comrie says, “Before deciding issues that concern both your health and your money, you need to do as much research as possible. There are many who sell everything they have so that a loved one can access lifesaving treatment. It is an unfortunate but frequent occurrence in the rest of the world and here in South Africa where more and more people are declaring bankruptcy to access healthcare such as scarce ventilators and medical care for Covid. Consider what is best to secure your future and ask yourself, are you covered when your health takes a turn for the worst.”

Comrie says Medical Aid and Medical insurance may seem like the same thing the truth is that Medical Aid and Medical Insurance are two different products. “It is worth mentioning that while Medical Aid is more expensive than Medical Insurance, there are more to these products than just the price point. There are expensive insurance products that pay very little of your claims, while there are expensive medicals schemes that cover you comprehensively. You will see that there are a few key differences to these products and comparing them directly is a bit like comparing apples and oranges. Both provide cover for when you’re ill, but there are distinct levels of cover.”

Confusion tends to set in when deliberating the complexities between medical schemes and health insurance. In the end it comes down to value or a cost vs benefits comparison.

“If you need a full range of basic stretching to comprehensive care, then you definitely need a medical scheme. If you are looking for basic cover under R500 a month, then you are probably looking at health insurance,” says Comrie.

Medical Aids in South Africa

What is the real difference between a scheme and insurance? On a scheme, which should be registered with CMS, even the lowest cover offers a reasonably comprehensive set of benefits known as Prescribed Minimum Benefits.

According to CMS, these are a set of defined benefits to ensure that all medical scheme members have access to certain minimum yet broad-based set of health services, regardless of the benefit option they have selected. These benefits aim to maintain a lowest level of acceptable cover to all medical scheme members which focusses  on care to improve their health and well-being. These benefits cannot be restricted in terms of funding and in general do not require any co-payments from members.

Medical insurance sits on the other end of the value scale, paying a set amount for your stay in hospital, usually restricted to a maximum of between R150 000 or R300 000, often not enough considering the high costs of medical care.

“Unfortunately, many health insurance providers pay very little towards claims and a lot towards their marketing and administrative costs. This often means only 60% – 75% of premiums are paid for claims. It’s precisely because they are affordable that there are significant gaps that result in  thousands of Rands being spent out of pocket when you land up in the ICU,” says Comrie. 

Recently we had a member who due to Covid 19 required a lung transplant. The member was in hospital for 3 months, required emergency air evacuation, had long term multiple ventilation and long term ICU of more than 45 days. The claims came to just under R10 mil and understanding this was unusual the member at-least received the best treatment possible. Limitation to hospital costs on a health insurance product would have covered only a few days’ worth of treatment.

Comrie lists the benefits of a medical aid:

•           Medical Aid provides comprehensive cover (prescribed minimum benefits).

•           Medical Schemes on average pay 85% – 90% of your premiums on your medical claims.

•           Medical Aid provides often provides cover for your day-to-day medical expenses such as doctors’ visits and medication; certain plans may come with a medical savings account for these claims.

•           Payments are made to doctors, hospitals or pharmacies directly from the scheme (or if you pay upfront, you need to claim back from your scheme).

•           Medical Schemes also monitor the quality of treatment while profiling to find and contract with the best specialists.

•           Medical Aid usually has different cover options, depending on you and your family’s needs, which range from Hospital Plans to Comprehensive cover.

Medical Insurance, are they really the cheapest option

Comrie says that medical insurance or hospital plans as we all know them are not necessarily the cheapest option. With the current state of the economy, many South Africans have been all but forced to downgrade their medical aid option, but even that may not be the most economical choice.

“You have to know your health status before you just downgrade your health cover. Do you have a chronic condition? Do you require dental constant treatment? Or need regular check-ups and tests for a particular illness or disease? These are all items that are likely not going to be covered in your hospital plan and will come straight out of your pocket,” says Comrie.

He does note that there are still terms and conditions you need to consider before taking a hospital plan. These include:

•           Medical Insurance can be taken out as a stand-alone product- when your Medical Aid savings account/day-to-day benefit has run out.

•           Medical Insurance pays you, not the provider – this means you will need to settle your accounts, with any shortfalls coming out of your pocket.

•           Medical Insurance pays out set amounts selected when taking out the cover (for example per hospital visit or procedure with overall annual or per event limits).

•           Medical Insurance usually offers limited cover for day-to-day medical expenses such as doctors’ visits and medication.

•           Medical Insurance does not have cover for prescribed minimum benefits as laid out by the Medical Schemes Act.

So, which cover is right for me?

If you’re still young and healthy and thus unlikely to incur a lot of medical costs, consider carefully the growing evidence which indicates that younger people are more vulnerable to high levels of motor vehicle accidents and other chronic conditions. Medical Insurance may be an option but consider the value carefully and not only the price.  If  have a family, or you’re on chronic medication, Medical Scheme cover is probably a more appropriate fit. You may even be better suited for a Hospital Plan only, instead of Comprehensive cover based on your needs and medical expenses.

To make the best decision for your cover, work out your needs and discuss changes like these with your accredited Financial Advisor who can help you make an informed decision about your health cover.

For more information about prescribed minimum benefits and which conditions are covered, learn more on the Council for Medical Schemes’ website.