2023 has been a year in which the cost of living has inflated out of control, sending most households over the edge financially.
In cutting costs, South Africans have had to relook at their greatest expense: healthcare.
Medical coverage often makes up the biggest expense on the household budget, but circumstances have forced many households to seek cheaper alternatives like low-cost health insurance. But is that the wisest move?
Before deciding on issues that concern both your health and your money, you need to do as much research as possible. Consider what is best to secure your future, and ask yourself: Are you covered when you have a medical emergency or when your health takes a turn for the worst?
Medical aid and medical insurance may seem like the same thing, but these are two completely different products.
While medical aid is comprehensive but more expensive than medical insurance, there is more to these products than just the price point. Both products may provide cover for when you’re ill, but there are distinct levels of cover that one needs to consider.
Confusion tends to set in when deliberating the complexities between medical schemes and health insurance. In the end, he says it comes down to value.
If you need comprehensive care, then you definitely need a medical scheme. If you are looking for basic cover under R500 a month, then you are probably looking at health insurance. The key issue is that health is the biggest investment you can make in the future of your family, so don’t buy cheap.
Medical schemes vs health insurance
What is the real difference between a medical scheme and health insurance?
Medical schemes are registered with the Council for Medical Schemes (CSM), ensuring that every medical scheme has more protection where even the lowest-cost hospital plans cover a comprehensive set of predefined benefits called Prescribed Minimum Benefits (PMB’s).
What PMBs do is maintain an acceptable level of cover for medical scheme members, which cannot be restricted in terms of funding and does not require any co-payments from members.
Traditionally, these are issues like emergency medical conditions, specified chronic diseases, pregnancy and childbirth, mental health conditions, most cancers, and much more.
Medical insurance sits on the other end of the value scale, effectively indemnifying an event by paying a set amount for your stay in hospital.
High-cost events are usually restricted to a maximum of between R150,000 or R300,000, which is often not enough considering the ever-rising cost of healthcare.
The experience in Profmed is that since Covid-19 is that more and more emergencies turn into cases that can run up to R1 million very quickly, even for short stays in hospital ICUs or high-care wards.
Unfortunately, many health insurance providers pay very little towards claims and a lot towards their marketing and administrative costs. This often means only 60–75% of premiums are paid for claims.
It’s precisely because they are affordable that there are significant cost gaps that result in thousands of rands being spent out of pocket when you land up in the ICU.
Know your needs before downgrading
It is critical that consumers understand their health status before downgrading their health cover. Many people forget they are ageing, and age brings the need for more healthcare coverage.
Do you have a family history affected by chronic conditions? Do you require ongoing optical and dental treatment? Do you need regular check-ups and tests for a particular illness or disease?
These are all items that are likely not going to be covered in a health insurance plan and will come straight out of your pocket.
Before opting for health insurance, it's crucial to consider the accompanying restrictions, often hidden in the terms and conditions. Insurance can be acquired independently and operates by reimbursing you for a health event rather than paying the actual cost of a healthcare provider.
Consequently, you are responsible for settling your accounts, including any additional costs not covered.
The payout from insurance is usually predetermined, set at specific amounts chosen during the initial coverage acquisition. This is typically for each hospital visit or medical procedure and is subject to overall annual or per-event limits.
However, it's important to note that Health Insurance offers limited coverage for day-to-day medical expenses like doctor visits and medication. Notably, it does not provide coverage for PMBs.
Therefore, prospective policyholders should thoroughly understand the details of what they are buying before settling for just the cheapest price.
No matter what 2024 holds, it is important to keep healthcare priorities high. There will be some who will be sufficiently covered and others who, after the fact, wish they had bought the right cover.
For the rest of consumers, inadequate cover could result in financial ruin. Consider your needs carefully and buy based on value, not price.
* Craig Comrie, CEO, Profmed.
** The views expressed here are not necessarily those of IOL or of title sites.
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