As medical cover costs increase many people are unable to afford even an entry level option on a medical scheme. There are other options in the market which provide at least some cover for basic medical needs. While people may be familiar with hospital plans, health insurance products sold through the short-term insurance industry is not as well-known.

The rising cost of healthcare and medical scheme increases well above inflation, has led to the emergence of a new type of short term health insurance product in South Africa that is ideally suited to new job entrants or lower income earners. However, the fact that so few healthcare consultants are licensed to sell the product means it is rarely offered as a solution.

According to Clayton Samsodien, Managing Director of Genesis Capital’s healthcare subsidiary – Genesis Healthcare Consultants – there has been a proliferation of new low cost, short term healthcare insurance products in South Africa. “Some of these products are offered by well-known brands but they are rarely highlighted as options to consumers, as so few consultants are legally licensed to provide advice regarding them.” This is because the products are governed under the short-term insurance act and most advisers who work in the healthcare space are not registered to sell short-term insurance products. Samsodien says a consultant could take the necessary examination, but in the current regulatory environment we are unlikely to see consultants voluntarily opt to take more exams.

“This can be the ideal product for those who cannot afford full medical aid or those who deplete their day-to-day benefits during the year. Cash strapped consumers do not have to resign completely from medical cover due to affordability and through healthcare insurance can still obtain access to quality GPs and primary healthcare institutions, particularly as we wait for cover under the National Health Insurance scheme to be implemented’” says Samsodien.

The pro’s and con’s of short-term health insurance

The biggest disadvantage of belonging to a non-medical scheme product is that you lose the protection provided by the Medical Schemes Act, says Alexander Forbes’s Butsi Tladi. The most important provision is unlimited cover for Prescribed Minimum Benefits on all medical schemes and options. Health insurance products also have stricter protocols with regard to some treatments, and may have additional exclusions says Tladi. Samsodien argues that Prescribed Minimum Benefits are the reason medical schemes are becoming unaffordable due to the cost of providing these benefits.

Some of the non-medical scheme products have a maximum age for membership so as you get older you will not have cover. When you try to apply for medical scheme membership later in life you will face penalties through higher premiums.

Some treatments will be approved, some not, and although you may get basic chronic, medical and dental care it doesn’t mean you can access top-of-the-range cancer treatments, for example. Some plans exclude operations like hip replacements or organ transplants. However Somsodien says some of these options pay out a specific rand amount for the treatment of these ailments.

Tladi says you would need to have a medical reason to opt for a Caesarean section on a low-cost health insurance plan, so if you’re planning to have a baby, ask what your options are.

You will not receive a tax concession as it is not seen as medial-aid cover, although some companies will still subsidise or pay the full contribution, so speak to your employer

The upside is that it provides very affordable cover for people who want protection but cannot afford a medical scheme. For about R250 a month, you can see a doctor as many times as necessary during the year and certain prescribed medications will be covered, too, says Samsodien.

Some of these plans provide cover for basic X-rays, blood tests, basic dentistry, glasses and emergency and trauma care. Be aware, though, that you must go to designated service providers that are part of the health-care network, so if you live far from these and your travel costs add up, it may not be worth it. Do the math.

Samsodien says some short-term healthcare products also offer a range of bolt-on benefits including cover for hospitalisation. “This means consumers can take a base line product such as a hospital plan offered by medical schemes, add day-to-day benefits and hospital gap cover offered by short term insurers and structure their own plan with the advice of an accredited consultant.” As an example, a family, principal member, spouse and two children could easily spend R6500 per month on a comprehensive medical aid. By combining the correct elements, the same family can save R3200 per month, representing a total saving of 49%. However it is best you get advice on this to ensure you have the correct cover in place.

Side bar: Hospital cash plans

A hospital cash plan is very basic insurance that pays out cash should you be hospitalised. Butsi Tladi, head of health inland region at Alexander Forbes, says if you’re on a hospital cash plan you must be very sure you can gain admittance at a designated hospital, so check if this is the case. Some plans may cover you on day two or three only, so you may have to fork out for some days in hospital yourself. Huge co-payments, especially on planned procedures, may also leave you out of pocket.
Ask the broker selling you the product what is covered and what exclusions may come into play.

Side Bar: Questions to ask your broker:

1. How accessible is the network of healthcare providers? Is your GP around the corner on the scheme, or will you have to travel some distance?
2. If you choose a hospital plan that makes use of network hospitals, you and your family members should consider your willingness to travel to another town to have an operation, for example. Ask which hospitals you would be required to use.
3. What will you be covered for and, more importantly, what won’t you be covered for? Ask your broker to give you a breakdown of all benefits and exclusions so you know exactly what you’re getting for your money. Don’t be blind-sided by ancillary benefits, which are not that important in the long run.
4. If you marry, have children, or your children leave home, consider if your existing medical care is still meeting your needs, says Oosie Oosthuizen, principal officer of Umvuzo. As your life changes, so, too, your particular health-care requirements – as well as affordability.

This article by Fiona Zerbst first appeared in City Press