Spring is a great time for reflection and renewal. CEB’s Healthcare Consultant, Paramesh Dayaram, helps clients take stock of their medical aid option in this practical article.
Reviewing your medical aid option is an important part of your budgeting process, but what do you need to consider?
Many South Africans are cutting back on costs in their budget in an effort to keep expenses down. Medical aid benefits are often one expense that gets ‘trimmed’.
Medical schemes have been launching their 2018 benefits and enhancements, and as usual, prices are increasing year-on-year above inflation. So, it’s wise to assess if the price you are paying matches the benefit you are receiving. There are three possible outcomes: remain on your current option, or downgrade to a lower option or upgrade to higher plan option.
The following list will help you review your medical aid option:
The fundamental reason members join medical aid is to ensure cover for hospitalisation. Consumers know that the cost for private care hospitalisation can be exorbitant and often financially crippling without the right level of cover.
Most schemes offer unlimited cover for hospitalisation. There are still a few options with overall annual hospitalisation limits that are aimed at providing some level of cover for lower income earners as opposed to no cover at all.
Schemes also provide options that impose restrictions on what hospitals members may use for a planned admission. This allows them to charge a lower contribution. So, if this is your option, make sure that you are familiar with the hospitals on the list.
The new generation plans offer a Medical savings account that cater for day-to-day expenses, subject to available funds. There a few traditional model options on the market; however, they are generally highly priced. Hybrid options offer a mix of benefits funded from medical savings and risk pools.
The extent of day-to-day cover is where most of the variation occurs in terms of options available, and can affect the overall contributions substantially.
This refers to the medical scheme’s rate of reimbursement for related accounts. Schemes can cover from 1 times, up to 3 times the medical rate depending on the plan option.
Questions to consider
- Are you comfortable with hospital restrictions for planned admissions?
- Do you have a Gap cover product? (To read our article on Gap Cover, click here.)
- What are the total out-of-hospital expenses for everyone on the membership?
Tip: Use an average of the last three years.
- What chronic conditions do we require cover for?
- What routine checks and tests do we have done?
- Are there any upcoming expected treatments that my family and I require in the next twelve months?
- Can I afford to pay day-to-day expenses out of my own pocket?
To assist you with your review, you can request these documents from your provider:
- Claims Transaction History Statement
- Self-Payment Gap reconciliation report (if your plan has this component)
- Chronic Benefits Guidelines
- Screening Benefits Guidelines
- Plan Brochures
The most effective way to review your medical aid plan is to compare your plan option and benefits on a like-for-like basis, factoring in your specific healthcare needs in a comprehensive review with your financial adviser.