Understanding Medical Cover – Your Questions Answered
For most South Africans, medical cover is their second highest monthly expense. Looking at comparative 2018 open scheme rates, a hospital plan costs R1614 on average for a principal member, accounting for 13.5% of the average SA salary. Gap cover is about R200 – R400 p/m. Add to this any day-to-day out-of-pocket expenses or a more comprehensive medical scheme option, and you’re looking at an even bigger portion of a salary going towards medical related cover alone. So understanding medical cover options is critical.
Martin Neethling, Business Head at Sanlam Healthcare Consultants, states that due to lack of understanding medical cover, people pay a lot for their medical scheme, but often still end up shouldering significant shortfalls when admitted to hospital or requiring expensive out-of-hospital treatment. “There are myriad products and providers to choose from, all with complex information and confusing terms of cover. It is therefore recommended that people review their medical cover options with a health accredited financial planner annually, to ensure that their benefits are in line with their health needs and current financial state.”
Understanding Medical Cover from Medical Schemes
“South Africa has 82 different medical schemes in operation. In addition, each of these schemes has a number of options to choose from. Add to this hospital cash back plans, gap cover, and primary health insurance, and it can be confusing to discern what is essential. Your financial planner knows you, your medical needs and your holistic financial profile. He or she can provide objective guidance regarding which policies are most relevant in every phase of your life. A non-accredited financial adviser can refer you to a healthcare consultant. He or she will have a better understanding of the benefits that each medical scheme option offers.”
Crucial Questions – and Some Answers
Here, Neethling delves into some of the crucial questions to ask and things to understand when reviewing medical cover
- What’s the danger of not reviewing one’s medical scheme cover? Here’s an example. Hospitalisation and specialist treatment account for most medical costs, according to the Council for Medical Schemes. Specialists and hospitals negotiate rates on an individual basis with different schemes. This means a specialist can charge double or more of the scheme rate. That creates a possible coverage shortfall of multiple folds. Too often people assume they have cover. Later on they have a problem when they experience big shortfalls or find they no cover at all. It’s important to take a 12 month view alongside an adviser who has insight into the fine print.
- Why do you need to look at more than one provider to cover your healthcare needs? The demarcation regulations governing medical gap cover, hospital cash plans and primary healthcare came into effect in 2017. The regulations prevent medical schemes from selling these products and vice versa. The Council of Medical Schemes governs medical schemes. However, the other products are governed by the Long-term and Short term Insurance Acts. Each of the products to cover all your healthcare needs thus have their own rules, benefits and regulations. And they address different needs.
- What are the “must-have” health products? The importance of products will depend on your healthcare needs and your ability to afford them. A comprehensive option is most desirable but depending on your or your families’ unique needs, extensive formularies and prosthesis benefits, dentistry, optometry or specialised cosmetic interventions can be further down on your healthcare menu.
What Can You Afford?
But not everyone can afford a medical scheme option or your healthcare needs might not require all of these benefits. The different options for someone with a limited budget or limited healthcare needs are:
- Primary healthcare insurance: It allows you access to medical practitioners and preventative care with immediate treatment that limits the risk of hospitalisation and chronic diseases.
- Gap cover aims to provide a ‘top up’ to cover the difference between what service providers charge and what the medical schemes cover when you are admitted to hospital. It is estimated that less than 10% of medical scheme members have gap cover, the absence of which could be a drain on finances, upsetting a carefully calculated financial plan.
- What am I paying for that I don’t need? Some people put the whole family on the most expensive option as a comfort blanket for the “what ifs”. This lack of understanding medical cover means they could be paying for rich benefits, which they don’t need or have a foreseeable risk for. Again, this is why an annual review is important. It’s better to keep family members with higher healthcare needs on a separate plan so the whole family doesn’t end up paying more for benefits not needed by everybody. However, confirm that your gap cover provider does allow you to take out one gap cover policy to cover family members on different medical schemes.