The industry of medical aid in South Africa covers more than 8.8 million beneficiaries with contributions amounting to around R180 billion. Despite the good numbers, the number of registered schemes declined by more than 33% in the past decade.
According to reports, private healthcare service in South Africa is said to be the costliest in the world. This is caused by inflation, the rising cost of medical equipment and supplies, and the shortage of specialist doctors in the region. These factors explain why recent statistics show that more than 83% of South Africa’s population has yet to obtain medical aid membership.
Still, having a medical aid to back you up in times of need is worth all the expenses and trouble. Nothing can replace your health as well as those of your loved ones which is why it’s still highly recommended to obtain medical aid to support you financially in times of need.
South Africa has a healthcare system offered by both public and private providers. Locals, as well as immigrants, need to know about these options to have more security in their everyday lives.
What is a Medical Aid?
Medical aid covers you from the financial cost of treatments and related expenses. In return, you have to pay a monthly premium to maintain coverage. In case of an accident, emergency treatment, or serious illness, you can rest assured that your medical bills will be taken care of by the medical aid scheme.
Applying for a medical aid scheme is one of the most effective solutions to protect yourself from costly medical expenses. This type of assistance also gives you access to medical professionals and other private healthcare services which may not be readily available in public hospitals.
The definition of medical aid can be confusing as it’s often referred to as medical insurance. Although it can be considered as a form of insurance, it differs in a number of ways.
Medical aids are handled by non-profit organizations. Unlike the typical, for-profit insurance policy, medical aids in South Africa are designed to protect the interests of its members. Although they’re not structured to squeeze money out of its members’ pocket, they’re required by the government to retain at least 25% of their gross income to be used as a hedge for future claims.
Medical aids are administered by Trustees which are appointed by the members of the scheme. These Trustees are expected to manage the scheme and ensure its compliance with government regulations. Additionally, since they’re working with profitability at the least of their worries, they can focus on putting the best interest of the members first.
Currently, there are more than 75 SA medical aid providers to choose from, each offering varying degrees of payment flexibility, coverage, and cost. All these schemes follow the rules and operation guidelines stated in the Medical Schemes Act.
Types of Medical Aid Schemes
There are seven main medical aid providers in South Africa.
There are basically two types of medical aid scheme available in South Africa: open and restricted.
1. Open Medical Aid
Open medical aid schemes are available to the public and anyone can be a member. As long as you’re not a member of any other medical scheme and you’re capable of paying the monthly premium, you won’t have any issue applying to your chosen program. Whether you’re employed, self-employed, or even unemployed, you can join an open medical aid scheme anytime.
Open medical schemes are easier to apply to and have fewer restrictions to maintain membership. Because of this, they usually have a larger member base and a bigger fund to use for claimants compared to restricted schemes.
2. Restricted Medical Aid
On the other hand, a restricted medical aid in SA requires qualifications that not everyone has. Some may only be available to workers of a certain industry, while some require you to belong to a specific professional association or trade union to be eligible to apply for the scheme. Some even accept only those that pass certain academic qualifications.
These criteria are not meant to discriminate applicants. They’re designed to minimize the risk of dealing with individuals from varied backgrounds and to make it easier for the provider to collect monthly premium from its members.
Restricted medical aids usually offer better benefits compared to open schemes. Employers may chip in a greater amount for the healthcare of their employees because of the lower risk associated with restricted schemes. The downside is that when the member of a restricted scheme leaves a certain industry or becomes unemployed, they may become ineligible to continue membership and will be forced to look for another SA medical aid.
To help you further study which scheme suits your situation best, the Council for Medical Schemes (CMS) has provided a list of legitimate medical aids available in South Africa. From here, you can compare which of the authorized schemes fall under your criteria.
Why You Need a Medical Aid
Consumers are already burdened by the 1% VAT increase and the rising prices of fuel and basic commodities add significant pressure to many South Africans. With budgets on a stretch, it’s no surprise why many put off getting into a medical aid scheme.
Despite all these hurdles, it’s recommended for those with families to allocate around 10% of their salary for healthcare. But this remains to be too high a price for many households. Many think that it’s a waste of money if they don’t get hospitalized within the year and make use of the benefits of the medical aid they’re paying for.
Your health and your family’s welfare can be put at risk anytime. Accidents and other unpredictable variables may happen no matter how careful or well-informed you are. In these cases, having a medical aid to support your healthcare expenses will help you better sleep at night.
Benefits of a Medical Aid
Medical aid schemes all follow government-stated Prescribed Minimum Benefits (PMB). All members must have access to specific services regardless of the type of coverage they choose.
Under the Medical Schemes Act, medical aid programs must cover the expenses related to the following situations:
- Emergency medical conditions
- Set of 270 medical conditions as defined in the Diagnosis Treatment Pairs
- Set of 25 chronic conditions as defined in the Chronic Disease List
Doctors are required to look only at the symptoms to decide whether a case falls under the coverage of a PMB. Then, the appropriate care and treatment are identified and the decision whether to put the claimant under inpatient or outpatient care is given.
Medical aids in SA have a Designated Service Provider (DSP) which is the scheme’s first choice when it comes to treating PMBs or any other medical service their members need. DSPs pertain to healthcare providers in the form of hospitals, pharmacists, anaesthetists, doctors, and other healthcare professionals. The list of recognized DSPs must be provided by the scheme to its members upon application. Medical aid scheme providers are mandated to ensure easy access to available DSPs to its members.
Choosing a DSP that’s not in your scheme’s list can be costly. You may have to pay the difference between the DSP tariff and the amount the provider you went to is charging. Exceptions apply to emergency medical conditions wherein your scheme is obliged to fully cover the cost regardless if the provider is a DSP or not.
Choosing a Medical Aid
When choosing medical aid in South Africa, it’s best to consider the following factors before making a decision.
- Budget and Needs
Medical aids don’t come cheap. Premiums range from a few hundred rands to more than R5 000 per month.
You have to ask yourself how much you’re willing to allocate on the monthly premium for you and your dependents. The more comprehensive the coverage is, the more expensive the scheme gets. Some extensive medical aids in SA may cover even regular check-ups and dental treatment of their clients.
The lifestyle of a single person compared to someone married and have children to take care of greatly differs from each other. The former probably has bigger financial legroom to spend on a more comprehensive medical aid while the latter has just enough for a basic coverage policy.
Most SA medical aids cover 100% of the cost as dictated in the National Health Reference Price List (NHRPL). Some even cover up to 300% of the cost which happens in cases where the claimant gets service from a non-DSP.
Before the procedure, it’s best to talk with the specialist on how much they’ll be charging for the service. After this, you should call your scheme provider to know how much they’ll be willing to pay for the procedure. Then, you can negotiate with the specialist regarding the expenses to make sure everything falls within your budget.
Supplementary to medical aids, members usually consider getting a gap cover to top-up their benefits and help cover medical expense shortfalls. This kind of insurance policy can cover the cost difference up to 400%. It’s also quite affordable, costing only around R100 a month.
- Waiting Period
Some medical aids in SA have a ‘waiting period’ that can last for a few months. Within this period, you won’t be covered for your medical expenses even if you’re already paying the monthly premium. Only after the prescribed time has elapsed will you be able to enjoy the benefits of the medical aid.
- Health Status
Evaluate your health first as well as your dependents before deciding on a medical scheme. Check your medical history to see which illnesses you’re most likely to be hit with and any other possible complications associated with it that may appear in your lifetime. Also, take a look at you the medical history of your family to see what possible illnesses you may have acquired genetically. These factors will help you decide which areas to cover on your medical aid.
- Administration and Reputation
Funds of medical aids must be handled no different than a private insurance scheme in the way that administrators must ensure the whole program remains viable to every member.
Medical aids in SA vary in the number of their members and the related solvency ratio. The law requires medical schemes to have a solvency ratio of at least 25%. Some schemes may have a large membership base but are having a hard time complying with the required 25% liquidity. This can result in higher premium increases by yearend.
Look for schemes with high solvency ratio. They might have fewer members but they have enough funds to use for claimants. They’re also less likely to have a premium increase at the end of the year.
Choosing the cheapest option is not always the wisest choice. There are many medical aids in South Africa to choose from so it would be to your benefit if you look into all of them and compare which one fits all the above factors discussed.
Regularly evaluate these factors as needs may change every year. You may add or reduce coverage depending on your current and forecasted situations.
As always, read the small print to know about any hidden charges or clause that may be disadvantageous to you in the future. The devil really is in the details so make sure you read everything twice before signing up.