Medical Scheme Compared to Health Insurance

    May 23, 2018

    Many consumers don’t know about the difference between medical insurance and medical aid schemes. Here we will have a look at medical scheme compared to health insurance.

    The recent amendment to the Demarcation Act seeks to clarify this matter and to clearly differentiate between the business of a medical scheme and the business of insurance companies that provide health-related insurance products.

    Advertising campaigns often further confuse the issue, leading consumers to make poor choices and to find out too late that their expenses don’t have coverage.

    Medical Schemes – Medical Scheme Compared to Health Insurance

    A medical scheme helps its members pay for healthcare needs. Members pay a monthly premium in order to receive this cover. There are many advantages to belonging to a medical scheme, including:

    • Financial protection if you suddenly have to pay unexpected medical bills
    • Generally, no need to delay treatment due to lack of funds
    • Generally, access to private healthcare without having to rely on public services


    Medical Scheme Compared To Health InsuranceHowever, medical schemes are also expensive and there can be hidden costs, such as co-payments for certain procedures.

    Medical schemes are regulated by the Medical Schemes Act of 1998. These schemes are non-profit and are required to pay for a list of 270 prescribed minimum benefits (PMB), regardless of your level of plan. They also have to pay for the treatment of 26 approved chronic conditions.

    Medical schemes must pay in full for the treatment of PMBs unless a scheme member chooses to use a provider other than that designated by the scheme.

    Hospital Cash Plans 

    These plans are not regulated by the Medical Schemes Act and are run for profit by insurance companies. They are usually more affordable than medical schemes and are therefore often more attractive to lower-income earners.

    Hospital cash plans pay a cash amount for each day in hospital (although some only start after a certain amount of days spent in the hospital) and do not differentiate between public or private hospitals. Proposed amendments to the Demarcation Act seek to force these plans to pay from Day one. These plans do not cover specific expenses, but rather just pay out a daily cash amount.

    Gap Cover – Medical Scheme Compared to Health Insurance

    Another area of confusion is gap cover. Gap cover is an insurance product but is only available to members of medical schemes. It pays for the difference between what a scheme will pay for in-hospital treatment and what the specialist actually costs.

    Proposed amendments to the Demarcation Act seek to extend this cover to other health products and services. This would result in much tighter regulations around the gap cover industry, which would protect medical scheme members but could also mean the cost of gap cover would rise.


    All info was correct at time of publishing