We entered this year with high hopes,
and no one could ever have predicted that so much can change in just one year. With the media headlining COVID-19 and the destruction that follows this pandemic we are all left fearing the future and reassessing our expenses, looking for low-priced alternatives. The internet has an infinite amount of information and this can end up confusing the best of us. There are promises of comprehensive cover and how important it is but do we really understand the fine print and make informed decisions? It is important to first understand the difference between Medical Aid and Medical Insurance and where they fit into our lives.
Medical schemes are governed by the Medical Schemes Act and there are set rules and regulations that have to be followed by the schemes. Medical schemes are not allowed to discriminate against a member in terms of age, health status, income, etc., and they are not allowed to decline cover for any member. Medical Schemes are however allowed to impose a general three-month waiting period, a 12-month condition-specific waiting period for pre-existing conditions, and late joiner penalties for members over the age of 35 (this penalty is based on previous medical scheme memberships). The premiums for a plan are the same for all members and the schemes are not allowed to charge a larger premium for members based on health conditions. The schemes do underwriting and take into account the member’s previous memberships and health, this determines the waiting periods and penalties that will be imposed.
Medical Schemes are also required, by law, to cover the full treatment cost of Prescribed Minimum Benefits (PMBs) which consist of 270 life-threatening medical emergencies and 26 chronic conditions irrespective of the plan offering. The medical scheme is allowed to insist that the treatment of PMBs take place at their medical provider networks.
Hospitalisation is usually unlimited at the defined scheme rate and limits are imposed on certain specialized procedures and devices. Some plans offer comprehensive cover for procedures and some plans exclude certain procedures outside of the PMB parameters. You have the option of paying less for a network plan where, to avoid penalties, you have to make use of the medical provider networks.
Medical schemes are non-profit companies governed by trustees elected by the members and have to maintain a minimum solvency level. This serves as an assurance to members that they are sustainable and there will be sufficient funds to cover the medical costs of the scheme’s members.
Medical Insurance is governed by the Short Term Insurance Act and offers different types of cover. We are going to focus on GAP Cover and Health Insurance for purposes of this article.
The main objective of GAP cover is to cover shortfalls caused during hospitalisation. It is not a replacement for medical aid and will only cover the procedures that are actually covered by your medical aid. Many GAP policies offer some form of out-of-hospital cover, such as specialist shortfall cover, cancer cover, and lump sum benefits, but this is limited to and dependent on your medical aid/scheme plan. These policies are limited by legislation and may only pay out a maximum of R 165 000 per annum for any claims under the entire policy.
With medical costs rising considerably and medical schemes being under more pressure to pay for these rising costs whilst still maintaining their solvency ratios, having a GAP policy will protect you from large medical expenses when you need to go undergo a procedure.
Health Insurance is often mistaken for medical aid. Health Insurance offers day-to-day cover for GP’s, cover for basic dentistry, some optometry benefits, emergency, and accidental cover. The hospitalisation offered is limited and on some policies only certain procedures are covered. On other policies only accidental injury and/or emergencies are covered. These policies usually pay a fixed amount for a defined list of injuries and emergencies irrespective of what the hospital actually charges and large shortfalls on payments made may arise.
Premiums are mostly determined by age and usually members 65 years old or older are charged a higher premium. Some companies do not cover persons over the age of 65.
These companies are “for-profit” commercial companies and are owned by shareholders. They are not obliged to accept all applicants and are allowed to decline a member if the risk, in their opinion, is too high.
So which one should I choose?
You can speak to your broker as they are trained experts and have the ability to assess your needs and recommend the most suitable options for you. The most important factors to consider are your needs and health status before making any decisions. The cheapest option is not always the best-suited option and this can be a very costly mistake. You also have the option of pairing your medical aid with GAP cover and Health Insurance to enhance your cover, but you need to have a clear understanding of your own needs.
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