Hospital Cash Back Plan Confusion

    There are two kinds of hospital cash back plan arrangements. Be sure what type of plan you buy.

    Types of Cash Back Plan

    1. Premium cash back

    The first kind of hospital plan that pays out cash is a premium payback. For instance, Old Mutual has an arrangement like this. If you buy into this type of insurance product then you will get a certain percentage of your premiums back after a certain length of time if you have not claimed on your policy. The period can be as much as 15 years. This amounts to a no claim bonus. This is not usually the kind of hospital cash back plan people are looking for.

    2. Hospital cash back plans

    The sort of hospital cash back plan that most people look for is the kind that pays out a certain amount of money each day you are in hospital. Typically the payout will only start on day three.

    Hospital Cash Back PlanPaying from Day 3 is the way the insurance companies manage their risk. Most people stay in hospital only a day or two so the insurance companies bargain on not having to pay out too much money.

    The most well known insurance company offering this kind of cash back plan is Clientele Life.

    Criticism of cash back plans

    Discovery Health –South Africa’s largest open medical scheme – has criticised hospital cash back plans. It is true that these have been abused widely. In fact Discovery’s own investigation unit has uncovered several such scams.

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    How a hospital cash back plan scam works

    People who are on a hospital check into hospital and make out they are really ill. They are kept in hospital for more than three days, undergoing tests. They then start claiming large amounts of money from their insurance company – amounts in the region of R3000 to R5000.

    Meanwhile the medical aid of which the patient is a member pays for the hospital stay, the costs of specialists, tests, consumables and so on. So the medical aid is out of pocket for the patient’s fictitious health problem. The patient benefits by having a harmless free holiday in hospital and getting a cash payout from the insurance company.

    There have been instances of the same person going to the same hospital repeatedly for these health holidays and claiming over and over again from the insurance company. Meanwhile medical aids such as Discovery have to pay for these fictitious holidays.

    Hospital cash back plan companies talk to medical aids

    This kind of cash back scam became such a problem to medical aids that they have set up lines of communication with the hospital cash back plan companies to cross check whether a patient is hospitalised for genuine reasons or if it is a scam.

    Benefits of a hospital cash back plan

    Having said all this, a cash back plan can be incredibly helpful if you land up in hospital for genuine reasons. The cash payout can help pay the shortfall between what the medical aid pays out and what the hospital actually changes (the co-payment) and can even help with expenses incurred at home while you are in hospital.

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