Portrait Of Smiling Young Friends Walking Outdoors Together
The monthly contribution for private medical aid may seem significant, especially if you’re young and healthy, and you feel invincible. But what could go wrong if you decide to go without it?
Before helping his clients plan for their ideal financial future, Bryan Nicol, Managing Director at Freedom Financial Planning (a lifestyle financial planning firm) stipulates that they must belong to a private medical scheme. There are two crucial reasons.
“Firstly,” advises Bryan, “in financial planning we seek to protect what we already have. This is called ‘risk management’. Our health is one of the most important and valuable things we can protect. So, we want to ensure that clients have the correct type of medical aid membership to provide for both ongoing and unexpected medical events. Medical interventions, especially surgeries and high-care treatments, can be extremely expensive.”
“Secondly, in South Africa, one simply cannot rely on the state health system to adequately provide for you. We have all heard the horror stories about trying to access care in state hospitals. So, an affordable hospital plan, bolstered by suitable gap cover, is a minimum requirement for all our clients. We cannot justify advising on a contribution to an investment portfolio, for example, if we have not addressed this risk first,” he adds.
The young, restless, and “untouchable”
Unfortunately, South Africans under 30 are putting off committing to a medical aid in large numbers, with some justification. Their calculations rightly show that monthly contributions represent a significantly larger proportion of their disposable income than they do for older, higher-earning individuals. On average, South Africans under 30 earn about 57% less per month than those over 30, largely because they lack experience in their chosen professions.
That’s why medical schemes need to cater to younger members’ lifestyle habits and financial realities and offer tech-savvy solutions that work hard for them while remaining cost-effective. These could include easy-to-use digital tools like mobile apps, telehealth access, and secure, seamless claims processing.
According to Sue Torr of Crue Invest, many young people believe they’re invincible and immune to significant medical expenses – but reality tells a different story.
“When it comes to advising our clients, we believe that joining a private medical aid, at the very least a hospital plan, is a fundamental risk management tool. The critical issue with not being on a medical aid is that the quality of care in government facilities can be substandard, and that the availability and timeliness of care, especially in emergencies, can be life-threatening. Government hospitals are often plagued by resource constraints, understaffing, and excessive waiting times, all of which can severely impact treatment outcomes and quality of life.”
Even if you’re young, fit, and healthy, there’s always the chance you could suffer a serious injury or accident requiring expensive medical procedures, care, or hospitalisation that your income can’t cover.
Illustrative case study: Cost of private hospitalisation in an emergency
A research study on the cost of inpatient management at a private hospital in South Africa, conducted after a spate of road traffic crashes, found that the average cost per patient per day was R256 382. The total average cost per admission for head and neck injuries (32%) and fractures (23%) was R11 014 187, made up of approximate direct and indirect costs (R5 995 872 + R5 018 315).
Although all patients were young and healthy before their injuries, with an average age of between 20 and 34 years, most were economically active individuals, and 72% were male.
Torr believes that private medical aid mitigates the potentially devastating financial risk of private hospitalisation while offering immediate access to high-quality healthcare facilities.
“Our advice to young adults,” she says, “is to consider medical aid as an investment for the future, rather than a grudge purchase.”
One accident or diagnosis can change everything, even if you’re young and healthy. A hospital plan with gap cover is the bare minimum. But understanding the why behind medical aid is only half the equation. The next step is making sure you choose a plan that truly meets your needs. That’s where many young adults slip up – and it’s what we’ll explore in our next article.