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How to optimise your medical aid cover

Published Dec 5, 2021

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PLANNING PERSPECTIVES

By Palesa Thloloe

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For many families, medical aid is one of the biggest monthly expenses. Premium inflation is on the rise, too: we are paying more and more for the same benefits. Despite all this, members still run out of funds in the middle of the year and have to pay out of pocket for medical services. This leaves a bitter taste in the mouth – so much so that it’s tempting to scrap medical aid altogether.

But this would be a mistake. Firstly, because medical aid is crucial in South Africa, where our national healthcare system has challenges; and secondly, because a medical emergency can end up costing you a lot more than you think.

As you plan for next year, here are some practical ways to streamline your medical aid so that you get the right cover, and you don’t pay more than you need to.

Understanding risk

It’s worth taking a moment to understand how medical aid works. Essentially, it’s a form of risk cover – similar to your car insurance (it is not an investment). Your monthly contribution goes into a pool to be shared by all paying members, on the premise that some members need more benefits and some need less, even though you pay the same amount. Those who need more are therefore subsidised by those who need less.

For example, if you have a car accident three months after joining a medical aid, and you end up in hospital with a bill amounting to hundreds of thousands of rands, your scheme will pay even though you only contributed less than R10 000 in premiums.

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It is for this reason that there are protocols and limits in place when it comes to paying for medical expenses. If left unmanaged, the entire medical scheme might collapse during a crisis, such as now during the pandemic.

Practical tips

Okay, you understand the concept. To make the most of your cover, take note of these points:

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• Know your benefits. Be clear on the benefits that your scheme provides. Know which category of claims may result in co-payments, and by how much your medical savings account will be credited each year.

• Use doctors on the network. Each medical aid scheme has a network of doctors and other medical professionals. If you use the doctors on the network, fees are charged at scheme rates and are often settled directly by the medical aid. Be aware that some doctors, usually specialists, are not contracted into any medical scheme. Ask the practice before you consult, because you might get a nasty surprise. Some specialists charge 300% or more of the scheme rate, and you will only be refunded a portion.

• Don’t neglect your emergency fund. Always keep an emergency fund separate from your medical aid for any additional and unexpected medical expense that your medical aid might not cover. The money in this fund should be easy to access at short notice.

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• Consider gap cover. Gap cover is extra insurance for medical expenses not covered by your scheme (see Rands and Sense on page 10).

• Dread disease cover. Severe illness or “dread disease” cover is a separate form of insurance offered by life insurance companies. It pays out on diagnosis of certain prescribed conditions. You don’t have to be bedridden or out of work for the benefit to pay out, and you can certainly use the proceeds to top up your medical and non-medical costs.

• Get advice. It pays to consult with a Certified Financial Planner (CFP) who has experience in medical cover. Visit the FPI website to find a CFP professional near you.

Palesa Tlholoe, CFP, is Co-Founder and Wealth Manager at Imvelo Wealth.

This article first appeared in the November 2021 edition of IOL MONEY digital magazine, devoted to healthcare issues.

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