It is that time of year when you will receive a letter from your medical scheme confirming your benefits and premiums for next year.

This year the average scheme increases were between 8% and 12%. According to Alexander Forbes Health, these price increases have been a result of increased fees by healthcare providers as well as higher hospital admissions.

Although the 2019 figures are not yet available, figures released by the Council for Medical Schemes show that that total value of claims paid in 2018 was R173bn, representing an 8% increase on 2017. Per beneficiary, the amount spent on healthcare claims was R19 546.

The only good news is that there were no significant changes or cuts to the medical scheme plans so you should still receive the same medical cover as last year.

Five ways to make your scheme work for you

When it comes to selecting your medical scheme, make sure you are only paying for the benefits you use – and find ways to be more cost effective.

Sign up for the network

Always sign up for the network option, as this will significantly reduce your monthly premium. Under the network option, you must use a hospital or doctor that belongs to your scheme’s network. This means the scheme can control the pricing of the health providers, allowing the scheme to contain costs and therefore reduce the claims on the fund.

Jill Larkan, head of Healthcare Consulting at financial advisory firm GTC says even if you find that the hospital closest to you is not on the network, it could work out more cost effective to select the network option and rather take out gap cover. (see gap cover below)

Register for chronic illness

If you have a chronic illness, make sure you are registered with the scheme so that your medication comes from your risk benefits and not your day-to-day savings. As with the network option, schemes offer lower premiums if you receive your chronic medication from a designated service provider.

Some schemes offer a further premium discount if you get your chronic medication from the state. This is a good option to select if you do not suffer from a chronic illness because you won’t be needing the service anyway.

If your chronic condition is not covered under the 26 chronic conditions stipulated in the prescribed minimum benefits (PMBs), you may be considering purchasing a more extensive plan that provides for your chronic condition. Before you do that, calculate whether paying for the medication from your own pocket works out cheaper than paying the extra monthly premium. For example, the difference in premium between Momentum Incentive and Momentum Extender is over R2 000 per month for the principle member. Incentive offers PMBs plus six conditions to the value of R 10 300 per family, while Extender offers PMBs plus 36 conditions, to the value of R 10 300 per family. It is the same maximum value but with extra conditions covered.

Save money with generics

Always opt for generic medication. These are covered by the network options, so you won’t be faced with co-payments. Even if you are paying from your own pocket, generics can save you hundreds of rands.

Send all claims to your scheme

Even if you have run out of savings, make sure all your medical bills and medication are still processed through your scheme. You will then receive a single document from your medical scheme with all your medical expenses for your tax return. If you have had significant out-of-pocket medical expenses, you may qualify for additional medical expenses tax credit. Anyone over the age of 65 or who is disabled can claim 33.3% of their medical expenses.

Get gap cover

Larkan says given the rapidly rising costs of specialists, gap cover has become an imperative. It is not unusual for a specialist in Gauteng to charge up to 700% of the medical schemes rate.

Larkan says like any insurance, the more comprehensive the gap cover, the more you pay for it. Gap cover ranges from as low as R120 per month for a family up to R400 per month, so you need to know what is included.

Some only cover for shortfalls between the doctor and the medical scheme while others include the co-payment on elective procedures. A more comprehensive option will include cover for emergency rooms (normally this is not considered to be in-hospital as it is run as a private practice) as well as additional benefits for oncology including a lump sum to pay for prosthetics.

“Given that the price difference between a basic plan and a more comprehensive one is only around R100 per month, it is worth taking out the best cover,” says Larkin who cautions members when completing “waiting room” documentation which specifically asks whether you have gap cover and through which provider.

“You must consider why this question is being raised at all. This begs the question as to whether providers then increase their fees to the maximums allowed by the top-up/gap covers.”

What if medical cover is just too expensive?

For many middle-class households, especially those with a single breadwinner, medical cover through a traditional medical scheme is simply unaffordable.

For example, a mother of two earning R15 000 a month would pay around R3 700 a month for her family, even for a basic entry-level option such as Discovery Key Care Plus. Considering that eats up 25% of her income, it is not viable.

One of the challenges with medical scheme coverage is that the government requires all medical schemes to offer a list of prescribed minimum benefits (PMBs) which includes 270 life-threatening conditions and 26 chronic illnesses that must be fully covered by a medical scheme. Cover for this list of PMBs cost around R821 per month per member.

Jill Larkan says as a result of the cost of medical schemes, primary care insurance products are becoming increasingly popular. These products provide for primary healthcare services through a network of private providers, but they exclude or limit private hospital cover which can be added as an extra.

Larkan says many households are selecting primary care insurance and then either combining this with a basic hospital plan or hospital insurance.

“This can be used to provide medical cover, but the risk to the insurer is limited as they are not required to cover PMBs and can price according to age and other risk factors.”

A primary healthcare plan covers non-hospital events such as general practitioners, basic and emergency dentistry, essential medicines, pathology and pre-birth maternity benefits. A family of four would pay around R700 – R1 100 per month, depending on the package.

The top-of-the range plans can include comprehensive day-to-day benefits and private emergency hospital stabilisation and medical treatment following an accident, while entry-level plans normally include basic day-to-day benefits only.

A basic hospital plan through a medical scheme that covers all PMBs starts at around R1 200 – R1 500 for a principle member and R500 – R600 per child.

An alternative is a hospital cash plan which is an insurance product that pays out a pre-determined amount per day that a member is in hospital and is not related to the actual hospital expenses. It only pays out from the second or third day in hospital. For example, FNB offers a hospital cash plan for a family of four at R317 per month which pays R1 000 a day if you are admitted to hospital. These products are currently registered under either the Long- or Short-Term Insurance Act.

(NOTE: Since publication of this article, Council of Medical Schemes has indicated that insurance type medical cover will be phased out in 2021)

Medical cover for students

Some medical schemes offer entry-level plans which are based on your salary band. These are aimed at individuals earning up to R12 000 per month and are cross-subsidised by higher-income plans.

Because students are not earning an income, they can receive medical cover at a greatly reduced price. For example, CompCare Wellness Medical Scheme offers plans from R404 per month which covers all PMBs, 27 chronic conditions, doctors, medication and hospitals on the network. Some student plans only provide for state hospitals, so you need to understand what the cover provides and make sure you are comparing like with like when looking at benefits.

What our premiums were spent on

The 2018/19 Council for Medical Schemes annual report showed that 91% of premiums were spent on healthcare claims and 9% on non-healthcare claims. For every R1 000 in premiums, R910 went to healthcare claims, R74.50 to administration, R13.50 to brokers and R1.90 to bad debt.

This article first appeared in City Press.