Many of South Africa’s medical schemes have announced their annual contribution increases for 2018, which are, as usual, well above the Consumer Price Index inflation rate. This is the time of year to review your cover and perhaps change your option to one that is more cost-effective for your circumstances.
Schemes allow you to change plans (or options) at this time of year for your cover for the following year, with the cut-off date around the beginning of December. There are no penalties or other adverse consequences for changing options within your scheme during this window period.
However, if you want to take the more radical step of changing medical schemes, which you can do at any time of the year, the new scheme is likely to impose a waiting period (typically three to six months) during which you will be covered only for emergency conditions. The new scheme may also charge you higher premiums or late-joiner penalties, depending on your age and how long it is since you were a member of a scheme.
If you are remaining with your current scheme, how do you go about deciding whether or not to change options?
You need to calculate how much your medical expenses amounted to over the year and how much of that was covered by your medical scheme. You then need to work out whether it will be more cost- effective, based on your anticipated expenditure for 2018, either to move to a higher option and pay a higher monthly contribution in return for increased benefits (and pay less from your own pocket) or move to a lower-cost option and pay more out of your own pocket.
Paul Roelofse, a Certified Financial Planner, in a blog for Radio 702, says no one knows what medical expenses they will incur in the future, so it is difficult to know which plan is best. However, he says an appropriate plan is one which is likely to provide benefits relative to your health and your affordability.
Roelofse says you get what you pay for. “The plans differ in price because of one reason: benefits. So the more the plan costs, the more the benefits compared with cheaper plans.”
He says if affordability is a problem, you should at least have a plan that covers you adequately for hospital admissions. “The cost of surgery is horrendous – so much so that hospitals won’t even admit you if you do not have sufficient cover,” Roelofse says.
He also recommends that you take advantage of the opportunity many schemes offer in managing – and improving – your state of health. “Schemes offer wellness programmes, which are really worth it if you work with them. They aim at rewarding you for being healthy, offering a definite value proposition that could compensate for the cost of your plan. The trick is to get involved and keep up with the programme,” Roelofse says.
When changing plans/options, it is important to thoroughly study the benefits and conditions of both your current and future plans. These are often complex, and it may take some time and effort to understand in what respects your cover will change. For example, cover for specialists used while you are in hospital may be covered up to 200% of the medical scheme’s suggested rate on one option, but covered only up to 100% of the scheme’s rate on another (see “What you need to consider when changing options”).
Kerry Vermeulen, the consulting manager at Alexander Forbes Health, says it may well be worth your while to consult a specialist healthcare broker before making a decision: “Your family has unique and changing healthcare needs and it makes sense to review your plan every year based on these needs. It is important that you understand how your healthcare requirements are covered on the plan you choose. This can be an overwhelming task and your broker can assist you with your decision.”
Vermeulen says a specialist healthcare broker will conduct a financial needs analysis, taking into account your medical history, anticipated hospitalisation and chronic medication requirements and day-to-day cover, as well as the affordability of the plan.
She says if you choose an option with a medical savings account, a maximum of 25% of your contribution may go into the account.
Vermeulen says the full savings amount for the year is available to you from January 1. Once your savings account has been used up during the year, you have to fund your day-to-day expenses from your own pocket.
“Some options within schemes have additional ‘threshold’ cover for members who feel that the savings allocation is not sufficient for their day-to-day needs. Unused savings for the year will roll over to the following year,” Vermeulen says.
Medical schemes also offer hospital plans with no medical savings accounts that cover in-hospital events only, as well as certain chronic conditions and the prescribed minimum benefits, which all schemes must provide by law.
You could also go for a network option, which limits you to healthcare providers within a network with which the scheme has an arrangement. “These options are cheaper, as the medical schemes have negotiated discounted rates with these network providers. Some low-cover and network options charge a premium based on your monthly earnings; therefore they could benefit lower-income earners, as they would pay a lower premium yet still obtain sufficient benefits,” Vermeulen says.
THINGS TO CONSIDER
The Board of Healthcare Funders of Southern Africa, which represents medical schemes and administrators, recommends that you consider the following if you’re moving options:
• Your health. It is important to look at the benefits offered by the new option in the light of your health needs. If you are relatively young and healthy and won’t need much medical attention in the course of the year, it might pay to move to a low-cost option. However, if you are getting older, have a family history of a medical condition, or suffer from a chronic condition that may not be covered, it may not be wise to change to a low-cost option.
• PMB cover. All options must, by law, cover the prescribed minimum benefit (PMB) conditions, a list of life-threatening and chronic conditions laid down in the regulations. However, you and your doctor have to convince the scheme that your condition falls within the PMBs before it will pay for it. Some schemes may ask you to use a specified provider if you want to be covered in full, and many have a series of “application” forms that have to be completed before you are covered.
• Medications and treatments covered. If you change from a high-end to a low-benefit option, you could find that medicines and treatments that were paid for aren’t covered on the lower option. An example is antidepressants and anxiety medications – only the higher-cost options tend to pay for these. Also, drugs listed for specific conditions may be different from the ones you are using. The medication you are on for your high blood pressure or high cholesterol may have to be changed to a brand (or generic) that appears on the option’s formulary if the scheme is to pay for it in full.
• Are your regular providers catered for? When changing options, you may find that you can’t use your family GP unless you pay the fees yourself. Or you may have to travel to a hospital on the other side of town to have an operation or see a specialist, because those closest to you aren’t on the list. If your current GP or specialist is not a member of the scheme’s provider network, you may have to change doctors.
DAY HOSPITALS A BOON FOR CONSUMERS
One way of tackling the high cost of health care is the growing collaboration between medical schemes and day hospitals, which is good news for consumers, says Bibi Ross-Goss, the group operational manager at Advanced Health.
“By avoiding unnecessary overnight stays, procedures at a day hospital are invariably less expensive than equivalents at one of the traditional, full-service hospitals. For example, in 2014, a patient would have paid about R11 000 through a medical scheme for a tonsillectomy in a traditional hospital, as opposed to about R8 000 at a day hospital,” Ross-Goss says.