If the increase in your medical scheme contributions will outstrip your salary increase, you are facing a hole in your budget in 2017. This, combined with above-inflation increases in the likes of electricity and school fees, may tempt you to “buy down” to a cheaper medical scheme option, which may or may not be a good idea, depending on your healthcare needs.
Victor Crouser, the coastal head of health at Alexander Forbes, says although schemes are being innovative in trying to design more affordable products, these options may require you to visit healthcare providers who are part of a network, or pay a higher co-payment, or they may have specific rules or conditions that govern how you must access your benefits.
“The concern is that members are then exposed to unexpectedly high medical costs if they do not completely understand what is on offer. We would urge members who are considering buy-downs to get in touch with their healthcare intermediary, either through their employer or directly, to discuss their situation and to obtain guidance in making appropriate choices for next year,” he says.
Dr Jonathan Broomberg, the chief executive officer of medical scheme administrator Discovery Health, says many more medical scheme members are seeking advice about which option they should join, but there are still members – particularly those with significant chronic conditions – who are underinsured.
Depending on your healthcare needs, an option with higher contributions may be more cost-effective than paying for most of your expenses out of your own pocket.
If you are healthy, however, it may make sense to opt for a cheaper option that has good hospital cover and then pay for your day-to-day healthcare expenses (visits to doctors, dentists and optometrists, as well as acute medication) yourself. However, for this to work, you must have the discipline to set aside the money you will need during the year. Also be aware that day-to-day expenses can be unpredictable, Broomberg says.
Only a few schemes allow you to upgrade your option during the year, but you can always upgrade at the end of the year.
Momentum Health provides the Health Saver, a savings account that is not part of the scheme, as a flexible way to save for healthcare expenses not covered by the scheme. If you combine this with Momentum’s health rewards programme, you can save money, because the cash rewards are paid into your Health Saver account.
Damian McHugh, the head of health marketing at Momentum Health, says these accounts may in future replace medical savings accounts within the medical scheme, to give members greater flexibility in how to use the funds accumulated in these accounts – including for retirement savings.
Remember that a cheaper medical scheme option is likely to have fewer or more restricted benefits. For example, cover for specialists may be reimbursed at a lower rate, such as 100 percent of the medical scheme rate, rather than 200 or 300 percent. This could expose you to out-of-pocket payments if you are admitted to hospital. Benefits for major medical expenses may also be lower.
You can take out gap cover to insure yourself against shortfalls between what a specialist charges and the rate at which the scheme will reimburse him or her. You need to consider your medical scheme contributions and gap-cover premiums and the benefits of both types of cover, note the exclusions, and bear in mind that pending regulatory changes may affect gap-cover policies in future.
Another way to contain your healthcare expenses is to move to an option that limits your choice of doctors, pharmacists and hospitals. Scheme options that offer cover through networks of these providers are typically cheaper than those that give you free choice.
Many schemes offer what are known as efficiency-discounted options, where your contributions are discounted if you agree to use only hospitals within a network.
Discovery Health Medical Scheme (DHMS) announced this week that it will expand its Smart options, launched last year, to include the Essential Smart Plan. This plan will offer hospital and general practitioner (GP) cover if you use providers who are part of a network, as well as cover for dental check-ups, eye tests and screenings, for R1 100 a month.
On its options, Momentum Health offers its members a choice of using any hospital or a network of hospitals, and of using any pharmacy for chronic medication, its contracted providers or the state. Some options also offer the choice of using any GP or a GP who is part of a network. The options that restrict your choices the most have the lowest contributions.
McHugh says the 15 percent of Momentum Health’s members who still have an unlimited choice of provider could have a lower contribution increase in 2017 if they moved to a more restricted option.
If your medical scheme introduces a network of providers for treatment covered by the prescribed minimum benefits (PMBs), you must use those providers, or you could be faced with a co-payment. (The PMBs cover the treatment of all medical emergencies, certain life-altering conditions and 25 common chronic conditions that medical schemes are obliged by law to pay for.)
Many schemes have preferred providers for certain conditions: if you choose to use them, the scheme will pay for your treatment. DHMS, for example, has introduced preferred providers for members with diabetes, psychiatric conditions, and those who undergo elective surgery for hip and knee replacements.