Tough economic times of rising fuel prices and inflation means that families are looking at different ways to save on household expenditure.
People may be tempted to swop their medical aid cover for a medical insurance product offered at a lower monthly cost.
However, there are differences between the two.
Lerato Mosiah, CEO of Health Funders Association, said: “It is important to understand these differences so that you have the necessary health cover to protect you when you are ill and need it most”.
What are the differences?
One of the key differences is the level of cover provided, which is determined by the medical aid benefit option you have chosen.
According to Mosiah, medical aids provide more comprehensive cover than medical insurance products because they are compelled by law to pay for a defined set of Prescribed Minimum Benefits (PMBs).
Some of the benefits include emergency medical treatment as well as cover of 271 medical conditions and 26 chronic conditions.
Mosiah said: “This means that even if your chosen benefit option provides basic cover, your medical aid must provide cover for all the costs related to these PMBs”.
Some medical aids may require members to get treatment for these conditions from doctors and health care facilities that are part of their designated service providers (DSP) networks.
Medical insurance products have limitations on what they cover.
“They are not required by law to cover the PMBs, and therefore, generally only cover certain specific health-related events,” Mosiah said.
Medical insurance products cannot fully cover people for medical costs such as costs related to a hospital visit.
Hospital cash plans will generally pay out a fixed lump sum, and while the idea of receiving a lump sum may seem attractive, the lump sum may not be enough to cover the costs related to a hospital stay.
What is gap cover?
Gap cover is to cover the hole between what medical aid pays out and what fee is charged by a doctor. Gap cover is for conditions that are not included in the PMB list.
Important medical aid and medical insurance facts:
- Medical aids are strictly governed and must adhere to the Medical Schemes Act.
- All medical aids are not-for-profit organisations and must abide by a set of rules.
- Medical schemes are required to hold sufficient reserves to protect their members by ensuring their continued operation and sustainability.
- A certain portion of a person’s medical aid contribution is tax deductible, whereas medical insurance premiums are not.
Mosiah said: “While medical insurance products may seem to be more cost-effective, they do not provide the level of benefits offered by medical aids. Understanding the difference between medical aid and medical insurance is critical to ensure that your family is adequately protected”.