By Kevin Yeh, CFP® Now more than ever, corporate and retail clients, young and old, need good financial advice. Getting good advice on health insurance is very important, to ensure you get the coverage that meets with your health needs. There are three parts to consider: The Core (Medical Aid), the Supplement (Gap Cover), and the Alternative (Health Insurance). The Core: When you consider private healthcare financing, medical aid is the Core. In South Africa, medical schemes are regulated by the Medical Schemes Act, so all medical aid plans offered by medical schemes must provide the Prescribed Minimum Benefits (PMBs) as stipulated by the Act. PMB covers many critical medical conditions, conditions that either require hospitalisation or ongoing treatment (chronic health conditions such as diabetes). As medical aid is required by law to provide such comprehensive range of benefits, it is expensive. It is therefore important to understand and compare various medical aid plans, to get the best benefits from a reputable medical aid given your budget. Some medical aid plans are hospital plans that also provide chronic illness benefits, while other medical aid plans cover hospital stays, chronic conditions as well as day-to-day expenses such as GP visits. Medical aid plans range from R800 to R8,000 per member per month. Students can qualify for very affordable medical aid plans designed for students, at about R350 per month. Unlike other financial products, medical schemes are not-for-profit entities that are regulated to ensure they fulfil a social solidarity role, i.e. everyone benefits from the dependence individuals have on each other. If you join a medical aid for the first time in your life, has a break in your medical aid membership or move from one medical aid provider to another, the medical scheme can impose a three-month general waiting period. This protects other members of the medical scheme by ensuring that individuals aren’t able to make large claims shortly after joining and then cancelling their membership. During the general waiting period a beneficiary is not entitled to any benefits, in some instances not even Prescribed Minimum Benefits (PMBs) during this period. If a beneficiary submits claims during a general waiting period, they will not be paid. If you have known medical conditions (including pregnancy) when joining a medical aid, the medical scheme will impose a condition-specific waiting period. A condition-specific waiting period can last up to 12 months. During this time a beneficiary is not entitled to any benefits for a particular condition for which medical advice, diagnosis, care or treatment was recommended or received. If you join a medical aid after the age of 35; the medical scheme can impose a late-joiner penalty (LJP) if you have never been a medical aid member, or if you cannot prove medical scheme membership for a specified period of time since April 2001. This is to ensure fairness (whereby members who have been part of a scheme for years are not subsidising newer members who have not contributed to the scheme). In addition, it also ensures that medical schemes cannot deny anyone who wishes to join. The late-joiner penalty (LJP) depends on your age as well as the number of years you have been a member of a medical scheme. If you are over 35 and haven’t been on a medical aid, you may be charged a surcharge between 5% and 75% of the standard contribution. For people over 60 years old, this LJP can be as high as 75%. If you can afford medical aid, it is in your best interest to join one as early as you can, even if it is the most basic medical aid plan, so that you can avoid late-joiner penalty in the future. Always keep proof of your medical aid membership when you leave a medical aid provider. In South Africa it is illegal to have more than one medical aid plans. The Supplement: All medical aid plans have a long list of terms and conditions, none of them will pay all the bills in all of the circumstances. In fact, many members will find out after a hospital stay that they still need to pay out of their pocket thousands of rands to specialists or even the hospital. Gap cover products on the market cover many of these shortfalls. They are a cost effective way to supplement your medical aid plan. Gap cover can cost you between R100 to R400 per month. People above age 55 pay more for gap cover. The Alternative: If you cannot afford a medical aid plan, consider health insurance. Health insurance is not a medical aid. It is a short-term insurance product. While it covers certain medical events, it does not cover PMBs as stipulated by the Medical Schemes Act, thus less comprehensive in benefits. It also has an annual benefit limit of R200,000 to R1,000,000, capping the amount paid to a policyholder. This is unlike medical aid, which can pay claims into millions of rands. A health insurance plan can cost you between R160 to R1,300 per month for individuals, and between R500 to R2,000 per month for a family of five. What questions to ask about a healthcare product Medical aid, gap cover and health insurance products are by their very nature complex, have a long list of benefits, terms and conditions. You should ask the following questions to a provider or a financial advisor about a healthcare product, to understand it and decide whether to buy it:
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AuthorKevin Yeh Archives
January 2025
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