By: Bradley Du Chenne, CEO of Hippo Advisory Services
As we review our major expenses for the coming year, healthcare costs should rank as a top priority. But as these continue to put a strain on consumer wallets, many people may be reviewing their options hoping to get better medical cover for less.
Comparing medical aids and health insurance options is a time-consuming and often arduous task as the variables are different between schemes, insurance providers and products.
The choice of medical aid is not simply around which company to opt for, but also which of the more than 200 benefit options would be most suitable for you and your family. Also, for those that have medical cover, understanding the level of cover is often only discovered when they need to claim. In the instance of shortfalls or complete exclusions, often no provision has been made, sometimes leaving consumers sorely out of pocket.
Ensure you know the basics first
“Before choosing from various cover options available, it is crucial to know whether you are buying a registered medical aid or health insurance product, and what the difference is between them, their cover advantages and shortcomings,” says Bradley Du Chenne, CEO of Hippo Advisory Services (a division of Hippo.co.za).
Du Chenne adds that, while the new regulations clarifying the role of medical insurance products and medical scheme products provide for increased protection for consumers, it is still vitally important to understand the differences between the two as well as how each is regulated.
Medical schemes operate on a universal enrolment basis. What this means is that the Medical Schemes Act makes it mandatory for all Medical Schemes to accept all applicants, and a scheme cannot refuse a person who wants to join. It can, however, impose a three-month general waiting period, a 12-month pre-existing condition exclusion and, in some cases, a late joiner penalty for new members.
Medical insurance products, such as gap cover plans, hospital cash plans and primary healthcare insurance products are all subject to new regulations and must now operate under similar underlying principles as medical schemes in that underwriting must occur on a non-discriminatory basis. Products like gap cover must accept anyone who chooses to join but are entitled to impose waiting periods.
Paying for cover
Medical schemes must charge all members of a given plan the same premium and cannot adjust the rate based on risk factors such as age, medical history, lifestyle factors or health status. This can benefit members with serious conditions and put others at ease that they will be covered should they ever contract these conditions.
Insurance products such as hospital cash plans pay out a lump sum unrelated to the actual cost of treatment you receive in hospital. These products usually pay out a daily rate and are aimed at protecting the consumer against loss of incidental costs such as loss of income.
Du Chenne points out that, under the new regulations, primary healthcare insurance products, which usually provide for a limited set of medical benefits, such as GP visits, acute and chronic medication, dental, optometry and emergency medical care, will be permitted to continue operating until such time as the Council for Medical Schemes introduces low cost medical scheme options.
“Once this happens, it is anticipated that primary care insurance products will migrate into that environment.”
Know what you are covered for
Medical schemes are required by law to provide all their members with a minimum level of mandatory cover, called Prescribed Minimum Benefits (PMBs), which covers treatment for 26 of the most commonly occurring chronic ailments/illnesses and over 270 other conditions.
“Members can rest assured that they are covered now or in the future for a range of conditions,” says Du Chenne. “But treatments or conditions that fall outside of these prescribed benefits may not be covered and may be very costly.”
Gap cover products are designed to cover the shortfall between what the medical scheme pays out and the rates that a health service provider charges. According to the new regulations, gap cover products may only be sold to people who are already members of a medical scheme. The new regulations also stipulate a payout limit of R157 000 per annum.
“Insurance providers decide on what they do and don’t cover,” Du Chenne explains.
“They are not obligated to provide a minimum set of benefits or to provide cover for common or expensive treatments. This means that primary care plans offering insured benefits for out of hospital costs and limited trauma benefits, are priced at a far more affordable rate than medical aid plans.”
“When buying an insurance product, it is crucial to understand exactly what is covered and what is not,” says Du Chenne. He adds that there are tools, such as Hippo.co.za, available to assist in comparing and understanding the various plans to ensure that consumers don’t end up under or over insured for their needs.
“There is no right answer when it comes to medical cover. It all depends on age, health, medical history, risk, and, increasingly, affordability. The most important thing is to make sure you make informed decisions to suit your individual needs,” he adds.