With many South Africans unable to afford medical schemes, medical insurance is filling in the gap. But you need to be aware of its limitations.

Medical schemes are becoming increasingly unaffordable for the average South African household. Statistics show that only 8.9 million South Africans are covered by a medical scheme. This is primarily due to the high costs of cover.

For even the most basic hospital plan a main member would pay around R1 500 to R2 000 per month. A single parent with a child could expect to pay at least R2 300 a month. This would require a take-home pay of at least R20 000 a month for the medical cover not to exceed 10% of the household budget.

Although, as Alan Fritz, acting principal officer of Medshield Medical Scheme points out, members can claim medical credits in their tax return. In the current tax year, a taxpayer can claim back R347 per month for the first two members and R234 for additional members.

This would effectively reduce the cost of the hospital plan for two members by R694, improving affordability. It is important that the member submits a tax return to ensure they receive their tax credit.

Fritz explains that the biggest driver of medical scheme contributions is the requirement to cover prescribed minimum benefits (PMBs) at cost. There is a list of 271 life-threatening conditions and 26 chronic illnesses that must be fully covered by a medical scheme. These need to be covered “at cost” and schemes often have little control over the fees charged by specialists.

“There are specialists who charge as much as 700% of the medical scheme rate, and these are sucking the schemes dry,” says Fritz.

According to the Council for Medical Schemes’ 2020 Industry Report the cost of providing cover for these PMBs is R866.02 per average beneficiary. This means that before the medical scheme can even start providing cover to its members for non-PMB events, the premium must be at least R866.

To provide even a basic hospital plan, the scheme would have to cover the PMBs at R866 and then add on the cost to cover additional conditions, hospitalisation, and preventative care, as well as administration and marketing costs.

In attempting to address the cost drivers behind PMBs, the Council for Medical Schemes is reviewing PMBs to “develop a comprehensive set of a Preventative and Primary Healthcare package for incorporation into the current hospi-centric and diagnosis-based traditional PMB package.”

Fritz says another major driver of medical expenses is hospitalisation, especially when it comes to elective procedures. During the Covid lockdowns, all non-emergency surgery was halted which resulted in large surpluses in the schemes’ reserve ratios. Due to these surpluses, schemes were able to delay annual increases and some schemes were even able to reduce premiums.

As hospitalisation is the major expense for any scheme, any increase in hospitalisation by members will continue to drive up costs.

Understanding medical insurance

While medical schemes become increasingly unaffordable, medical insurance is filling a gap. As medical insurance is not a medical scheme, it is not required to provide full coverage for PMBs.

Because it is an isurance product, it can apply risk rating, waiting periods, and limited cover, all of which make it more affordable. However, the medical tax credit does not apply to medical insurance policies.

Several new players have entered the medical insurance sector. DisChem Health has partnered with Kaelo, a leading company in the health insurance sphere, and Tyme Bank has announced a partnership with the National HealthCare Group to offer primary healthcare cover.

Madelein Barkhuizen, executive manager at Bestmed Medical Scheme says it is important for people to understand the limits of medical insurance.

In essence, medical insurance is for day-to-day out-of-hospital medical costs and is unlikely to cover private hospitalisation for non-emergency events. Top-of-the-range plans can include comprehensive day-to-day benefits and private emergency hospital stabilisation benefits, while entry-level plans normally include basic day-to-day benefits only. This means that without a hospital plan, a policyholder would still rely on state hospitals.

Medical insurers recommend their primary healthcare products as an add-on to a medical scheme’s basic hospital plan. Barkhuizen says you should first compare what you would receive from the scheme if you rather used the medical insurance contribution to “buy-up” with your existing scheme.

“Members do not always understand how much cover they actually have on even a basic hospital plan,” says Barkhuizen.

A basic hospital plan already covers most of the medical insurance offering. For example, the Bestmed Beat1 hospital plans all include preventative care as part of the package. This includes female contraceptives, pap smears and mammograms.

PMBs also cover hormone therapy and chronic medication which are excluded or limited on medical insurance products. There are maternity benefits included such as scans, lactation consultations and blood tests.

You can reduce your day-to-day spend by using the designated service provider recommended by your medical scheme. These are providers who have an agreement with the scheme on how much they will charge. You are then unlikely to land up with a bill from the specialist that charges 700% of your medical scheme rate.

The bottom line is that if you can afford a basic hospital plan, that should be your first choice. In addition to access to a private hospital, you will receive cover for 271 life-threatening conditions and 26 chronic illnesses, as well as many preventative care options.

Take the time to understand your medical cover and ensure that you are making the most of the benefits.

New medical insurance options

Dis-Chem Health

This medical insurance gives you a basket of benefits ranging from access to private doctors, dentists, and optician visits, chronic, acute and over-the-counter medication, as well as accidental emergency hospital cover and value-added services like family counselling and legal advice.

The Core plan is the standard primary healthcare insurance option, with monthly premiums starting at R431 for adults and R302 for children.

The Plus plan, at R591 per month for adults, is a more comprehensive option with the same benefits as the Core plan but also includes unlimited access to doctors and virtual consultations, specialist visits and chronic medication for 27 conditions.

Accident cover is available as standalone cover or as an add-on to either the Core or Plus plans, and offers private ambulance transportation, emergency casualty treatment, and hospitalisation resulting from an accidental event, as well as accidental death and disability cover.

More details can be found at www.dischemhealth.co.za.

TymeHealth

TymeHealth is a partnership between TymeBank and the National HealthCare Group. It gives members access to day-to-day cover, hospital and casualty ward cover, specialist visits and chronic needs, among others.

It includes over 12 000 registered healthcare providers, including GPs, pharmacies, dentists, optometrists, specialists and hospitals countrywide through the extensive National HealthCare Group provider network.

There are three available plans: MediClub Connect at R139 pm, MediClub Premier at R299 pm, and MediClub Elite at 399 pm. More details can be found at www.tymebank.co.za/products/tyme-health/.

New plans from established medical schemes

Bestmed Rhythm1

Bestmed has launched a new basic hospital plan called Bestmed Rhythm1 aimed at people earning less than R14 000 a month. It is a network plan, which means you need to use their designated service providers. Apart from fully covering all PMBs, the out-of-hospital benefits include unlimited visits to a Bestmed family practitioner and basic dentistry.

The cost is R1 200 for a main member earning less than R9 000. If the tax credit is applied, this effectively reduces the cost to R853 per month. A member earning between R9 000 and R14 000pm would pay R1 400 a month (or R1 053 after the tax credit is applied).

BestMed’s Beat1 Network is more cost effective for a main member earning more than R14 000. This includes additional benefits paid from risk cover including eight preventative care benefits.

The premium is R1 570 for main member, R1 220 per adult dependant and R661 per child. A parent with a child would pay R2 230 (R1 536 after applying the tax credit) or two parents with two children would pay R4 112 (R2 950 after the tax credit).

Medshield MediSwift

MediSwift is a hospital plan aimed at healthy, active individuals.  It includes a physiotherapy and biokinetics benefit with two family practitioner visits annually. The plan is specifically targeted at active and generally healthy people who might require treatment, but whose injuries are not serious enough for a hospital admission.

The MediSwift plan also features an annual Medshield Wellness benefit that includes the Covid vaccine, flu vaccine and birth control, as well as tests for cholesterol, blood pressure, glucose and BMI, amongst others.

The premium is R1 908 for a main member, R1 860 for adult dependent and R489 for a child. For two parents and a child, the total premium would be R4 257 (R3 329 after applying the tax credit).

This article first appeared in City Press.