Get the right medical cover for you needs

Editorial contribution by Momentum Health

South Africa’s volatile economic climate, along with increasing household expenses, often leads to consumers prioritising their budgets for more immediate expenses. Coupled with rising medical costs, this creates a formidable challenge when it comes to medical care in the near future.

Whether you are a parent or a young professional, the medical cover chosen needs to be flexible to your everyday and changing needs, as well as one that allows you to prepare for unexpected incidents.

Cutting costs

Cutting costs has become a financial trend among most homes in South Africa. According to the 2015 Unisa Momentum Household Financial Wellness Index, 80% of households are struggling to make ends meet. Consumers are continuously encouraged to supplement or enhance their healthcare offering by acquiring additional health insurance, like gap cover. But many consumers are faced with questions like: what are the different types of health insurance products? How will it benefit me? Will my pocket suffer or be compromised?

Often, we have the misconception that our medical aid will cover all our hospital expenses. It’s not as simple as it looks, as we don’t plan for the unexpected. Thinking that you could be totally cared for, following an unforeseen accident in your car or at home, is untrue.

Medical schemes are not run for profit, and are required by law to pay for the treatment of a defined list of 270 Prescribed Minimum Benefit (PMB) treatments, whether you have an expensive comprehensive plan or a hospital plan. They also have to pay for the treatment of 26 chronic conditions under the PMBs. Due to the potential high cost of these claims, medical aids are able to mitigate some of the risk by allowing for the treatment of these PMBs through their designated service provider or DSP.

While some households are thriving, others are simply surviving. More people find it expensive to maintain their medical aid cover. However, many consumers have discovered that having just a medical aid is not enough to cover expenses for unexpected medical treatments, or to fund for the costs of lifestyle changes that you need to make as a result of these unexepcted treatments. Hence, it has become valuable for people to consider acquiring a health insurance product.

Health insurance

Simply put, health insurance is a channel designed to further cover your medical expenses, in addition to those your medical aid covers. For example, these products could cover the difference between the rates charged by medical providers and the rates paid by your medical aid, up to certain maximum limits.

Most people would ask, “But why does my medical aid not cover all my hospital bills?” The answer to this lies with the budget allocation of a medical aid for each hospital treatment/ procedure. Medical aids draft specific budgets, in which they need to negotiate with hospitals, doctors and specialists. The rate that the parties agree on is called the medical scheme rate, which operates in isolation from your health insurance. It is important to note that providers are not required to charge the agreed medical scheme rate and this then leaves the shortfall on the consumers’ shoulders to carry.

In October last year, the National Treasury tabled the third revised Draft Demarcation Regulations in Parliament, which it intends to finalise in the near future. This regulation outlines that hospital cash plans are confined to paying clients R3 000 per day, with a total lump sum of R20 000 annually. Previous to this, government questioned gap cover policies, as it gave doctors authority to charge higher rates to clients.

Two categories of health insurance products are specifically provided for in the demarcation, namely:

• Medical expense shortfall policies (gap cover plans)
• Non-medical expense cover as a result of hospitalisation policies (hospital cash plans).

These types of policies will see minor changes, however, the availability of these solutions will not be impacted. The effective date of the final regulations has been communicated as 1 April 2017. With this implementation, the new definition of the business of a medical scheme will come into effect.

Over the last few years the shortfall between what specialists charge and what medical schemes cover has grown exponentially. Specialists increasingly charge more than a scheme’s recommended rates and members are often left with large unpaid bills. Simply put, medical expense shortfall policies (gap cover) pay the difference between what a specialist charges and what the scheme pays for in-hospital and certain out-of-hospital procedures (up to a maximum limit).

This does not mean that by downgrading to a cheaper medical aid plan within your scheme that you will pay less. On the contrary, by acquiring gap cover and downgrading your medical aid plan, you could be at risk of not having additional in and out-of-hospital benefits when you need them the most. This is why, before making decisions such as these, you need to consult your financial adviser who will be in a position to compare your needs and finances to be able to suggest a suitable medical aid option and supplementary cover, should you need it.

According to the head of marketing at Momentum Health, Damian McHugh if you’re thinking of downgrading, you should do so for the right reasons.

“Should you downgrade because of affordability issues, you’re most likely still going to pay for your treatment in some form. Downgrading your medical aid plan to acquire health insurance does not save you money. However, by using a combination of health insurance effectively, you’ll be able to save adequately for your family’s needs,” said McHugh.

Types of health insurance

There are various types of health insurance namely:

• Gap cover
• Hospital cash plan, and
• Critical illness cover.

Traditionally, in the event of an emergency or accident some medical insurance products provide patients with a lump sum each day that they are in hospital. It is often seen as a bridge between hospital fees and medical aid funds.

Here are a few things to keep in mind when using a medical insurance product:

• It may be used in conjunction with medical aid, it is not seen as a replacement to your medical aid.
• It covers certain accidental injuries.
• It gives you the option of including death and/or funeral cover.
• It covers treatment at fixed or stated amounts.
• Claims are paid to the member.
• It is an insurance product so the insurer can fully underwrite the risk, i.e. they can decline cover, or impose exclusions and can load your premiums.

Acquiring health insurance early on in your medical scheme history, regardless of what plan you’re on, is highly beneficial in planning towards unforeseen circumstances. Just as you could put money aside for a car insurance plan, so should you take out a health insurance plan, to ensure that your medical and financial well-being is met.

Momentum Health is an open medical scheme. For more, see www.momentumhealth.co.za.

 Handy tip: You can apply for medical aid cover on Justmoney.