The health insurance market is at a crossroads in 2024 as exemptions under the Medical Schemes Act are set to expire.
According to Profmed, the expiration raises concerns for thousands of South Africans regarding the sustainability of health insurance products and the potential impact on consumers nationwide.
"2024 becomes a critical year for the health insurance market as exemptions granted under the Medical Schemes Act are due to expire in March,“ said CEO of Profmed, Craig Comrie.
“Without these exemptions, health insurance products may be forced to transition into medical schemes and will be subject to stringent regulatory requirements which will result in large premium increases."
Comrie believes that health insurance products were always expected to face this day, and the impending expiration of exemptions poses significant challenges for consumers.
The potential consequences of regulatory changes cannot be understated.
Comrie shares two major impacts:
– some individuals may transition into medical scheme environments
– others may find themselves without coverage.
“People need to seriously consider the implications and understand the difference between health insurance and medical aid,” stated Comrie.
What are the differences?
Lerato Mosiah, the former CEO of the Health Funders Association and the current executive director of the Leato Group shares the differences between medical aid and medical insurance.
Medical aid
One of the key differences lies in the level of cover provided, which is determined by the medical aid benefit option you have chosen.
According to Mosiah, medical aids offer more comprehensive cover than medical insurance products because they are compelled by law to pay for a defined set of Prescribed Minimum Benefits (PMBs).
Some of the benefits include emergency medical treatment as well as cover of 271 medical conditions and 26 chronic conditions.
Mosiah said: “This means that even if your chosen benefit option provides basic cover, your medical aid must provide cover for all the costs related to these PMBs”.
Some medical aids may require members to seek treatment for these conditions from doctors and healthcare facilities that are part of their designated service providers (DSP) networks.
Medical insurance
According to Dischem, medical insurance, commonly known as health insurance, is a form of insurance cover that focuses on essential healthcare needs and covers those medical expenses or part thereof.
Medical insurance products have limitations on what they cover.
“They are not required by law to cover the PMBs, and therefore, generally only cover certain specific health-related events,” Mosiah said.
Medical insurance products cannot fully cover people for medical costs such as costs related to a hospital visit.
Hospital cash plans will generally pay out a fixed lump sum. While the idea of receiving a lump sum may seem attractive, the lump sum may not be enough to cover the costs related to a hospital stay.
Important medical aid and medical insurance facts:
- Medical aids are strictly governed and must adhere to the Medical Schemes Act.
- All medical aids are not-for-profit organisations and must abide by a set of rules.
- Medical schemes are required to hold sufficient reserves to protect their members by ensuring their continued operation and sustainability.
- A certain portion of a person’s medical aid contribution is
Mosiah said: “While medical insurance products may seem to be more cost-effective, they do not provide the level of benefits offered by medical aids. Understanding the difference between medical aid and medical insurance is critical to ensure that your family is adequately protected”.
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