What is the difference between Medical Aid and Medical Insurance?
The confusion between medical scheme benefits and insurance products, such as hospital cash plans, means that you, as the consumer, could end up with the incorrect product which could have disastrous effects on your health and finances.
The first, and possibly the most important, factor to consider is who regulates the plan that you’re considering.
Medical Aids or Medical Schemes are governed and legislated under the Council for Medical Schemes. The Medical Schemes Act regulates what is covered, who can be covered and how they can be covered. All Medical Schemes are required to cover a list of Prescribed Minimum Benefits, so even if you’re on a hospital plan you will still have cover for certain conditions. PMBs fall under the Medical Schemes Act, and medical schemes must cover the costs related to the diagnosis, treatment and care of the following:
- any emergency medical condition.
- a limited set of 271 medical conditions and
- 25 chronic conditions.
Medical Schemes charge the same premium for the same plan regardless of the clients’ health conditions etc. The Scheme may impose waiting periods and / or a late joiner penalty for members over the age of 35 who have never belonged to a Medical Scheme before or who have had an extensive break between memberships.
Medical Insurance falls under the Short-Term Insurance Act. Clients can be excluded if they have pre-existing conditions, premiums can be increased due to the client’s health status, age, etc. Insurance products can include a variety of products such as hospital cash plans, gap cover, medical travel insurance and primary healthcare.
How they work
A medical aid plan will typically cover all the expenses associated with an in-hospital stay (plan type dependent) and it pays for treatment according to the specific medical scheme tariff. You can opt for a plan that has a Medical Savings Account (MSA), a percentage of your monthly premiums is put aside for the use of any expenses that fall outside of your hospital stay, like a visit to your GP or Dentist. Alternatively, you could opt for a Traditional Plan, this plan has day-to-day benefits specified, specifying either how many GP visits you have per year or a specific network of GPs for example.
How are premiums determined?
Medical aid premiums vary in price, depending on whether you only want in-hospital cover, if you want an option with a Medical Savings Account or a Traditional plan including day-to-day benefits.
Medical aids are legally obligated to cover PMBs, to ensure that all medical scheme members have access to certain minimum health services, regardless of the benefit option they have selected.
With health insurance policies, the premium a client pays will depend on a variety of factors, for example older clients, or those with pre-existing health conditions, are likely to pay more for health insurance cover and in some cases, cover may be refused if the insurer considers the risk of claiming will be too high. Clients of Insurance products are not afforded the same protections as medical scheme members through the Medical Schemes Act.
Products such as gap cover can be a valuable and practical add-on to medical scheme products. Hospital cash plans pay out fixed lump sums irrespective of the service levied by hospitals, specialists and other providers of healthcare services, normally after a certain number of days in hospital. If you are hospitalized for a shorter period of time you may not be eligible for a pay-out.
Medical schemes reimburse all the providers, including hospitals and specialists, directly. This has the advantage of taking care of all the administration while the patient concentrates on their recovery.
So, how do you go about picking the right medical aid plan for you and your family?
- Work out your budget.
- Think about what you would need from your medical aid plan? Do you only need to be covered if you land up in hospital or do you also want funds to cover day to day medical expenses? Do you have chronic conditions that need to be covered?
- Then shop around between the different medical schemes to find the best plan for you and your family.
Consult an accredited broker. Brokers go through extensive training and are up to date with changes in legislation, benefits etc. and will be able to give you great advice as well as follow up services. They have access to information from the various Medical Schemes and can do a full comparison as well clear through the jargon for you.