According to the Council for Medical Schemes 2021 Annual Report, only 14.86% of people in South Africa belong to a medical scheme. The primary driver of this disparity is the rising cost of private healthcare. With healthcare inflation soaring, it is even more important to know and understand the benefits you are entitled to so that you can get the most out of the monthly premiums. In this article, Gary Feldman, Executive Head: Healthcare Consulting for NMG, takes you through some important considerations that you should keep in mind to maximise your medical scheme contributions.
Finding an appropriate medical scheme option can be a complex process, but there are a few steps you can take to help narrow down your options and find an option that meets your needs.
In South Africa, medical scheme coverage is available to all regardless of age or health status. To minimise risk, medical schemes are entitled to impose late penalties and waiting periods on members.
According to the Medical Schemes Act No 131 of 1998, a late joiner penalty is a fee that is charged to members who join a medical scheme after the age of 35. The penalty is calculated on the number of years a person has no coverage after the age of 35. The late joiner penalty is designed to discourage people from only joining a scheme when they need medical treatment and to ensure that there are enough healthy members to offset the costs of providing healthcare to older or sicker members. The penalty is calculated as a percentage of the member's premium, and it increases with each year that the member delays joining a scheme.
Waiting periods, on the other hand, are periods during which new members are not covered for certain medical services. Waiting periods can apply to all members who join a scheme, regardless of their age or health status. Waiting periods include:
On majority of South African medical schemes, there are no overall annual limits for private hospital cover. Depending on your chosen medical scheme option, in-hospital procedures are covered either 100%, 200%, or even 300% of the medical scheme rate. Certain options also only offer cover for in-hospital procedures in a network hospital.
Even if your medical scheme covers 100%, it does not mean that everything will be covered in full. There are no regulations that restrict the amount providers charge, and these rates go as high as 500%. Gap cover is a solution for the shortfall that you may have if your doctor charges more than the scheme rate.
Medical schemes provide coverage for a specific set of 27 Prescribed Minimum Benefit (PMB) chronic conditions, which are life-threatening and require ongoing medication and treatment. Examples of these conditions include diabetes, high blood pressure, high cholesterol, asthma, and heart failure. This coverage is paid from risk and does not affect day-to-day benefits but requires registration with the medical scheme and meeting clinical entry criteria and review processes.
Some medical scheme options may offer coverage for additional chronic conditions based on the level of cover chosen. Medication is covered according to a formulary, or medicine list. Failure to follow the formulary may result in a co-payment on medication each month.
Designated Service Providers (DSPs) may need to be used for medication collection and delivery.
Healthier individuals are better suited to schemes with a medical savings account:
Medical savings accounts are designed to allow members to manage their own medical expenses. Day-to-day claims which are submitted to your medical scheme are refunded from the savings account. Remaining savings at the end of a calendar year will be carried over into the new year. This means you can build your medical savings account up over the years if you are in good health and don’t often claim.
Traditional schemes offer members cover for day-to-day medical services limited per medical category. Benefits that are not utilised during the year will be carried over to the next year.
You and your family’s general state of health will inform whether you should choose a traditional medical aid or a new generation product that includes a medical savings account.
Have a clear understanding of how above-threshold benefits work:
An above-threshold benefit is like a safety net most commonly available on comprehensive plans. Once you deplete your medical savings account you enter the self-payment gap where you will be liable to cover the costs of your claims out of your own pocket. Whilst in the self-payment gap, it is important to continue to submit your claims to the medical scheme to ensure that your expenses accumulate to the Above Threshold Benefit where more cover will be made available to you.
Take special note of these important considerations that may differ from medical scheme to medical scheme and from plan to plan:
Typically, medical schemes off loyalty reward programs to incentivise members to live a healthy lifestyle.
The loyalty program may be structured around various activities or behaviours, such as doing regular health screenings, exercise, and eating healthier. Schemes encourage members to understand their health status by offering free screening tests. Favourable results often attract higher rewards.
The goal of a medical scheme loyalty program is to encourage members to engage in healthy behaviours that can prevent or manage chronic health conditions.
Some of the more cost-effective medical scheme plans will provide you with a predefined list of network doctors and hospitals that are compulsory to use. These doctors and networks negotiate discounts and special rates with the medical scheme, making them more cost-effective. If you use a provider outside of this list, you will be liable for the costs. You must make sure the doctors and hospitals on the list are close to where you live to make sure they are easily accessible. Find out when you are allowed to go out of the network so that you don’t incur unnecessary costs.
Medical aids make annual changes to their benefits and premiums. You need to find out when your medical aid updates its benefits and revises its premiums. Your medical scheme should send you an updated benefit schedule as soon as (or before) changes are implemented. Take the time to familiarise yourself with the changes and updates to ensure you are not taken by surprise.
Medical providers in South Africa are not required to charge certain fees for service which creates a gap between what the provider charges and what the medical scheme refunds. Further to this, medical schemes develop hospital shortfalls in the form of co-payments and deductibles to ensure that unnecessary procedures are not performed in hospital. As a result, members are often forced to pay out of their pocket for certain procedures. These amounts are never defined clearly upfront, leaving members with unexpected post-procedure bills that they are not prepared for. Gap cover is a short-term insurance product that covers the costs of certain unforeseen hospital procedures. It doesn’t replace comprehensive medical cover, it complements it. It is a real value-add and is cost-effective – especially considering the peace of mind it will give you.
NMG Consultants are qualified to give you independent advice at no cost to you. Broker fees are already included in your monthly premium and are paid by the medical scheme.
Ensure that you are purchasing appropriate cover to meet the needs of your family. This is where NMG can add significant value.
T&Cs apply. NMG Consultants and Actuaries (Pty) LTD is an authorised financial services provider FSP 12968
