You often see people requesting advice on social medical as to what medical aid they should consider, often enquiring “Which is the best medical aid?”. These posts generate a high number of comments with people generally sharing their medical aid experiences.
While your medical aid contribution is often one of your highest monthly expenses, it is also one of your most important expenses with regard to yours and your family’s wellbeing – so it is definitely worth taking a bit of time to ensure that you are on the right option.
While this process may appear to be a minefield for most people, it is important to start with understanding how medical plans work.
Most medical aids offer a variety of plans which vary quite significantly with regard to the contributions that they charge.
If you earn less than a defined threshold (approximately R15 000/month), a few medical aids offer what is known as a capitation option. These plans have several income bands (up to the threshold) which determine the monthly contribution. The benefits for each plan will be the same no matter the income band.
Once you earn above the threshold then the other plans will apply. Importantly, with these plans, the medical aid must charge the same contribution to a person irrespective of their age or their health. This requirement raises several issues for medical aids to manage; however, a discussion concerning these is beyond the scope of this article.
While there are many medical aids offering a myriad of plans which may appear to be a daunting prospect to comprehend, all these plans are ultimately based on the same principles:
- They must make provision for the prescribe minimum benefits (PMBs) as described below.
- They generally offer a hospital (or a major medical) benefit,
- They can offer day-to-day medical benefits e.g. GP, dentist visits, maternity benefits optometry benefits, over the counter medication, disease management programmes etc.
- They can offer preventative and detection test and procedure benefits.
- They can offer complementary benefits such as emergency medical evacuation, international emergency medical cover, 24 hours health lines etc. and
- Some plans are may also be linked to reward programmes.
Given the scope of the potential “optional” (non-PMB) benefits it is easy to understand why there are so many plans which start at an affordable entry level, or basic cover, and range to high-cost extensive cover options. The number of different elements that comprise a benefit option also make an exact comparison between options an almost impossibility.
Medical plans can also have differing contribution structures which can comprise amounts for
- Risk benefits
- Compulsory savings
- Discretionary savings and
- Complementary benefits
It is apparent that the contributions options also compound the difficulty in making comparisons between different medical comparisons.
Below we give an overview of the structure elements of a medical plan as well as brief overview of the contribution structures which should allow you to better understand the contribution being charged and hopefully make a more informed choice.
Prescribed Minimum Benefits
In terms of the Medical Scheme Act all registered medical schemes must cover the costs related to the diagnosis, treatment and care of:
- An emergency medical condition
- A defined list of 270 diagnoses
- A defined list of 26 chronic conditions
This requirement of medical aids is one which makes medical aid cover very different to health insurance, and hence usually more expensive.
An emergency Medical condition
An emergency medical condition means the sudden and, at the time, unexpected onset of a health condition that requires immediate medical treatment and/or an operation. If the treatment is not available, the emergency could result in weakened bodily functions, serious and lasting damage to organs, limbs or other body parts, or even death.
In an emergency it is not always possible to diagnose the condition before admitting the patient for treatment. However, if doctors suspect that the patient suffers from a condition that is covered by PMBs, the medical scheme must approve treatment. Schemes may request that the diagnosis be confirmed with supporting evidence within a reasonable period.
A defined list of 270 diagnoses
There is an annexure to the Medical Schemes Act which has a list of approximately 270 diagnoses which are classified into 15 broad categories such as Brain and Nervous system, pregnancy and childbirth etc. For each diagnosis, the list also specifies a treatment – which is why these are also referred to Diagnosis and treatment Pairs or DTPs.
COVID-19 has been declared a PMB so all the costs related to the diagnosis, treatment and care a person contracting COVID-19 must be covered by the medical aid (from the “risk” premium and not out of their savings).
While medical aids are required to cover these costs, they can specify designated services providers that their members must use as well as what level of diagnosis, treatment and care a member is able to receive. The minimum allowed being that which a person would receive in a state facility. This can be an important differentiator as more expensive plans can allow access to more expensive medication etc.
The defined list of 26 Chronic conditions
The 26 chronic conditions which medical schemes are required to cover comprises:
- Addison’s disease
- Bipolar mood disorder
- Cardiac dysrhythmias
- Cardiac failure
- Chronic obstructive pulmonary disease
- Chronic renal disease
- Coronary artery disease
- Crohn’s disease
- Diabetes mellitus Type 1
- Diabetes mellitus Type 2
- Multiple sclerosis
- Parkinson’s disease
- Rheumatoid arthritis
- Systemic lupus erythematosus
- Ulcerative colitis
The Council for Medical Schemes has published minimum standards of treatment for each of these conditions and a medical aid may not provide treatment that is inferior to these standards. Again, the medical plan may specify designated services providers that their members must use as well as what level of diagnosis, treatment and care the member is able to receive – with more expensive plans allowing access to more expensive medication etc.
Hospital or Major Medical Benefit.
This benefit covers the expense of various specialised procedures and treatments that are performed in a hospital including accommodation as well as the cost of the medical specialists.
The hospital or major medical benefit is probably the most important benefit a person considers when joining a medical aid.
This benefit is usually defined in terms of rates and limits. Each medical scheme determines certain rates at which they are prepared to pay for these costs, referred to as the medical scheme’s Health Rate. A common misconception is this is an industry wide rate ubiquitously referred to as “The” medical aid rate! Each medical aid will agree a rate with a hospital group as well as a rate for medical specialists.
It is common for medical schemes to negotiate preferential rates with certain hospitals groups which are then classified as “network” hospitals. The medical schemes may then:
- Make it a condition that members on certain benefit options or plans may only use these network hospitals or
- Discount a member’s contribution if the member elects to use these network hospitals or
- Agree to pay up to a certain rate for the use of non-network hospitals (which could even be 100%)
A medical scheme may even define several hospital networks within their benefit options.
Having defined a rate, a medical aid may also impose a limit on the total hospital costs that they will cover.
The concept applicable to hospital accounts regarding an agreed rate is also applied to any attending specialists and the costs of a contracted specialist will generally be paid in full.
For non-contracted specialists the medical plan option will specify a maximum rate that will be paid to the non-contracted specialist e.g. 100%, 200% ,300% etc. of the medical scheme’s Health Rate.
Should a member elect to use a non-contracted specialist and their medical aid does not cover the full amount charged by that specialist, the member will then be liable for a co-payment to that non-contracted specialist (commonly referred to as a gap payment).
Apart from the hospital and specialist expenses, medical schemes structure the hospital or major medical benefit to include various sub-limits. These sub-limits could include:
- The number of days covered in high or intensive care.
- Maternity confinements.
- Neonatal intensive care.
- Organ transplants.
- In-hospital dental and oral benefits.
Naturally, these limits are higher on the more expenses/comprehensive plans.
Breadth of cover
Breadth of cover refers to which treatments and procedures are covered by each benefit option i.e. joint replacements may not be covered by an entry level benefit option. It is very important to understand which procedures are and are not covered by a medical plan.
A common concept in the short-term industry is for the insured to accept responsibility for an initial amount of any claim known as the excess. By applying this condition, a short-term insurer can lower the premium as it will ultimately result in fewer claims.
This concept is also applied by medical aids when structuring benefit options; however, the excess is known as a co-payment. Common co-payments are applied to:
- Hospital admissions
- Certain medical procedures
- Medical scans e.g. PET, MRI and CT scans
- Having medical procedures performed in a hospital at the member’s insistence when the procedure could have been performed in the doctor’s room or a day clinic.
Hospital or major medical benefit summary
Comments have been previously made that it is difficult to try to do an exact comparison between two medical benefit options. This is reinforced by the situation where the hospital or major medical benefit alone may be configured with the following options:
- The rate and limits for the payment of the hospital account
- The rate and limits for the payment of the specialists’ accounts
- Limits or sub-limits applied to the costs of certain conditions or procedures.
- The scope or breadth of treatments covered.
- The application of co-payments.
Day-to-Day medical Benefits
The day-to-day medical benefits such as GP visits, dentistry, optometry, radiology, prescribed medication, over the counter medication, specialist visits, physiotherapy, pathology etc can vary tremendously between medical plan options from
- From providing no day-to-day medical benefits at all– these options are often referred to as a “hospital plan” to
- Allocating a portion of the member’s contribution to a “Medical Savings Account” which provides a budget for these expenses. Once this budget is exhausted then
- the member could then be liable for these expenses or
- A medical insurance policy becomes effective and covers these expenses or
- Including a specified bundle of day-to-day benefits as part of the benefit option. Once these have been utilised the member will then be responsible for these costs.
The Medical Scheme Act stipulates that where benefit option allocates a portion of the contribution to a medical savings account, that allocation cannot exceed 25% of the total contribution.
Apart from the above options, instead of a purely financial limit, a benefit option may also specify certain limits e.g. the number of GP or specialist visits per year etc. the number of spectacles allowed in a certain period etc.
Preventative and Detection Benefits
It is in a medical scheme’s best interest for its members to be able to identify potential medical conditions as early as is possible as early treatment may avoid the high cost of a more developed condition.
To encourage their members to be more conscious of their health and to be able to potentially identify the early onset of any conditions, many medical options also cover the cost of various regular early detection tests such as
- Pap smears
- DEXA bone scans
- Cholesterol and blood sugar tests
These benefits are generally age/gender specific.
While these tests may also be categorised as day-to-day medical expenses, they are often specified separately to highlight the importance of members undertaking these tests on a regular basis.
To further distinguish their plans, medical aids also include various “extended”/”complementary” benefits in their options. These benefits can include:
- Maternity programmes
- Disease management programmes
- Emergency medical evacuations – either local or international or both.
- International emergency medical aid cover (including emergency dentistry)
- Access to telemedicine systems
And as an even further way to differentiate their benefit options, some medical schemes offer Reward Programmes. These rewards programmes can provide both medical and non-medical related rewards and usually have the objective to encourage a member to engage with the programme and live a healthier lifestyle.
Apart from encouraging a certain level of engagement by the members, these programmes are also a mechanism to retain members as they will forfeit their rewards should they cancel their membership. By having fitter, healthier members, they also assist in lowering the amount of medical aid claims.
Having reviewed the different benefits that medical schemes use to configure their benefit options, there are also several different ways which a medical scheme structures the contributions collected from their members.
All-in-one Premium- no Savings
These contributions cover the risk elements such as the hospital/major medical benefit, the PMB benefit as well as any day-to-day benefits and other complementary benefits offered by the medical plan.
These premiums are typically for what are referred to as traditional medical aid plans, where for a set premium you receive a set amount of benefits. Once these benefits have been exhausted the member is responsible for any further expenses.
All-in-one Premium- with Savings and a threshold
Some contributions to medical aid plans are split into a risk element, that covers the major medical benefit and the PMB benefit, and a potion is allocated to a Medical Savings Account which generally covers the day-to-day expenses. These are your so-called new generation medical plans. Once your Medical Saving Account has been depleted one of 2 situations may occur.
- The benefit option may specify a threshold and once your savings are depleted your expenses are then covered in terms of some form of insurance scheme i.e. your premiums do not change, but your expenses still covered.
- You are then responsible for your day-to-day medical expenses.
As mentioned previously, no more than 25% of the contributions can be allocated to a Medical Savings Account.
It is apparent that just this payment option can lead to a lot of diversification between various plans and the benefits that they are able to offer i.e. a 10% saving contribution compared to a 25% savings, threshold or no threshold etc.
“Risk” only premium
To try to make access to private healthcare as affordable as is possible the contribution covers only the risk benefits – the hospital/major medical benefit and the PMB benefits. The member is then responsible for their day-to-day medical expenses.
Voluntary Saving option
To assist members of benefit options where the contributions cover the “risk” benefits only some medical schemes have ancillary medical saving options where members can elect to save an amount that they consider appropriate for their day-to-day expenses.
Medical Aid Structure Summary
In trying to summarise all of these different permutations it is useful to note that medical plans/benefit options are based on a few principles
- They have to provide certain minimum chronic benefits (PMBs)
- They offer varying degrees of hospital cover
- They then also offer varying degrees of other benefits e.g. day-to-day and complementary benefits.
When costing their benefit options, medical schemes utilise things like
- Provider choice
- Co-payments and limits
- Structure of contributions savings/no savings etc.
With so many potential options, a person trying to identify the most appropriate medical aid plan is effectively forced to:
- Determine their minimum medical aid requirements and that of their family having regard to their age, state of health and what their potential future requirements may be and then,
- Try to determine what is their budget, and then,
- Try to match these to a medical plan.
Ultimately the adage of “you get for what you pay for” applies so don’t expect a hospital or major medical benefit to have all of the bells and whistles for a low premium.