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WORDS ON WEALTH

This is the time of year when medical schemes typically have their window period for members to switch plans (known in the industry as “options”) if they want to, either by upgrading to a more expensive option that offers more benefits, or by downgrading to a cheaper one that provides a lower level of cover. Depending on your scheme, you’ll have until the end of this month, middle of next month or the end of next month to do so.

Your scheme will probably by now have issued new brochures detailing all the details of benefits and contributions for next year on each option in their range. It may be laborious, but it is worth going through these thoroughly, checking any changes in benefits on your current option, as well as comparing option benefits if you want to change. Schemes with better websites have handy tools for comparing options.

Contribution increases for 2020 are relatively high - more than 12% in some cases (see table). To get the best value for money, you need to compare option contributions and benefits against what you paid this year, both in contributions and out of your own pocket, weighing up whether to contribute more by switching to a higher option (and pay less out of your own pocket), or to contribute less by switching to a lower option (and self-fund a higher proportion of your expenses).

You can also look at ways to save, such as switching to one of the increasingly popular network options whereby you are restricted to the use of healthcare providers on the scheme’s network.

Jacqui Nel, business unit head of healthcare at Aon South Africa, says: “Before making any changes, it’s crucial to thoroughly review the benefit richness of a medical scheme option and the cost of your cover measured against your unique healthcare needs and circumstances. Doing a personal needs analysis, reviewing your claims history and affordability all come into play. But while your claims history is an indicator, no one can predict health risks that may occur, so it is important to understand your approach to and ability to take on any risk.”

What to consider

Here are some of the things you should consider when assessing your medical cover for next year:

Benefit limits. Your option will have an overall benefit limit for the year as well as subcategories with their own annual limits. Check on the changes to these limits compared with last year. Limits on cancer treatment (oncology), in particular, should be noted.

Prescribed minimum benefits (PMBs). Your scheme may appoint one or more designated service providers (DSPs) for the diagnosis, treatment and care of PMB conditions, and a list of these providers should be available. If you choose not to use the DSP, the scheme may charge a co-payment.

Medicines. A scheme may have a list of medicines (available for your perusal), known as a formulary, for which it will pay in full. If you voluntarily use a medicine that is not on the list, the medicine may not be covered, or the scheme may impose a co-payment.

In-hospital rates. Check the rate at which your option pays doctors who treat you in hospital - for example, this may be 200% of the scheme’s rate. Check that this rate has not been decreased. Gap cover can bridge this payment gap.

Network options. Some options offer benefits through a network of healthcare providers. These save you money in two ways - the contributions are lower and you are not subjected to co-payments if you use the providers in the network. If you are considering such an option, check on your scheme’s network of providers, taking into account their proximity to where you live, and the expected quality of care or treatment.

Managed care. Schemes may have managed-care programmes for treating certain PMBs and chronic conditions, such as diabetes. These should be well explained in your option brochure so that you know the correct procedures to follow.

Medical savings accounts. The money that accrues to a medical savings account, if your option carries one, is yours, and the scheme should allow some flexibility in how it is spent. You typically have access to the full amount for the year up front.

Above-threshold benefits. This feature of pricier options covers your day-to-day costs once you have depleted your medical savings account. But there is typically a “self-payment gap” between the savings account and the threshold. If this is too wide, the benefit may be of little value.


MEDICAL SCHEMES vs HEALTH INSURANCE

Short-term insurance products, such as gap cover or hospital cash plans, may be a cost-effective way to supplement your medical scheme cover. But, if you are cash-strapped, be extremely cautious before replacing medical scheme cover with a short-term product. 

Bradley du Chenne, chief executive of Hippo Advisory Services, says that while the new regulations applying to insurance products provide for increased protection for consumers, it is still vitally important to understand the differences between medical schemes and health insurance products as well as how each is regulated.  

Medical schemes. “The Medical Schemes Act makes it mandatory for medical schemes to accept all applicants, and a scheme cannot refuse a person who wants to join. It can, however, impose a three-month general waiting period, a 12-month pre-existing condition exclusion and, in some cases, a late-joiner penalty for new members. Medical schemes must charge all members on a given plan the same premium and cannot adjust the rate based on risk factors such as age, medical history, lifestyle factors or health status” Du Chenne says.

He says 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 chronic illnesses and over 270 other conditions.

Health insurance. “Products such as gap-cover plans, hospital cash plans and primary healthcare insurance products are all subject to new regulations and must now operate under similar underlying principles as medical schemes in that underwriting must occur on a non-discriminatory basis. Products like gap cover must accept anyone who chooses to join but are entitled to impose waiting periods. 

“Insurance products such as hospital cash plans pay out a lump sum unrelated to the actual cost of treatment you receive in hospital. These products usually pay out a daily rate and are aimed at protecting you against loss of incidental costs such as loss of income.

PERSONAL FINANCE