With the introduction of new regulations in April 2017, the health insurance industry significantly broadened South Africans’ access to medical cover.

Historically, health insurance providers could refuse to cover individuals based on a number of factors such as age, disability or health status. The introduction of the Demarcation Regulations, which prohibit this form of discrimination, has unlocked access to medical cover for low-to-middle income earners who might previously have believed that it was beyond their grasp.

“People often believe that medical scheme cover is the same thing as health insurance,” says Sonja Visser, chief executive of African Unity Life. "However, in reality, the two are very different. Health insurance is usually much more affordable and, as a result of the new regulations, this type of cover is now available to everyone.”

Before choosing between medical scheme cover and health insurance, it is important to understand the differences and benefits of each product type.

Who qualifies?

Previously, only medical schemes were obliged to provide all applicants with cover. However, the new regulations make it mandatory for health insurance providers to grant cover as well. In both cases however, a three-month general waiting period, and a 12-month pre-existing condition exclusion can be imposed.

“The intention of insurance is to protect people against unforeseeable circumstances,” explains Visser, “These restrictions prevent individuals from only taking out insurance when they know that they are likely to require medical treatment, only to cancel the policy immediately after treatment.”

Paying for cover 

Medical schemes must charge all members of a given plan the same premium and cannot adjust the rate based on risk factors such as age, medical history, lifestyle or health status.

Prior to the introduction of the Demarcation Regulations, insurance products could vary the amount they charge based on these considerations. However, now they are also required to charge all members equal rates.

Higher premiums may however be charged according to the age at which members enter into an insurance agreement, provided the same charges are applied to all members taking out cover within that age category.

What you are covered for?

Medical schemes are required by law to provide all their members with a minimum level of mandatory cover, called prescribed minimum benefits (PMBs), which covers treatment for 26 of the most commonly occurring ailments and over 270 other conditions.

Visser says that insurance providers, on the other hand, are not obliged to provide a minimum set of benefits or to provide cover for common or expensive treatments.  “This means that health insurance products can be priced at a far more affordable rate. Policyholders must carefully read their policy document to ensure that they are aware of what they are covered for.”

Payment of claims

Medical scheme providers will pay medical bills on behalf of a member. This might include paying for hospitalisation, medical procedures, doctor’s consultations and certain medications. They pay medical aid rates, which should sufficiently cover costs. However sometimes specialists charge more, Visser points out. “In this case, Gap Cover can be taken out to fund any shortfall between the amount covered by the medical scheme and the medical service provider charge.”

On the other hand, medical insurers are prohibited from paying medical institutions directly for medical expenses. Instead, an amount of up to R3 000 a day or a lump sum of up to R20 000 a year can be paid to the principal member directly for non-medical expenses incurred due to hospitalisation. It is up to the beneficiary to decide what should be done with the money.

“Although health insurance differs from medical scheme cover, its affordability makes it more accessible to low-to-middle income earners,” says Visser, “The new regulations now mean that more people can enjoy its benefits.”