‘People have two different reactions to a medical aid. Either they are frustrated about making contributions into a bottomless pit or they get down on their knees and thank the Lord they have one,” says Alan Pollard, general manager of research and development at Discovery Health.
Medical aids are great when you need them, but they are basically a grudge purchase.
This is reflected at the Mail & Guardian. One employee is furious that he and his partner pay R20 000 a year in contributions but have only R5 000 for day-to-day medical expenses. ”What the hell are they doing with the other R15 000? I understand risk sharing, but I think a 60/40 split would be more appropriate,” he laments.
The couple buy about R500’s worth of vitamins and over-the-counter medicines a year and may each see a GP once a year at a cost of about R400. This year, the employee needed dental work that amounted to about R3 000.
Both he and his partner wear glasses, which cost them about R2 500. This alone pushed them past their day-to-day medical savings by R1 400.
When his partner collapsed last month and required R800’s worth of blood tests, he was no longer covered by his medical savings.
Another employee has a family of four. She contributes R40 000 and gets back R11 000 in medical savings. In one year, her family experienced four hospitalisations. During her pregnancy, she was admitted to hospital for three days: estimated cost, R7 000. The birth was a caesarean section: total cost, R24 000.
One child was hospitalised with croup, which cost about R2 500, and her husband developed a throm-bosis, which cost another R5 000. The medical aid covered all the hospital expenses, which amounted to about R38 500.
If any of her family required on-going medication for chronic illnesses such as diabetes, this would be paid for out of the plan’s hospital and chronic medication portion and not the day-to-day savings.
In addition, her day-to-day savings ran out in June and she moved into the threshold safety net — currently all day-to-day medical expenses are covered at medical aid rates. Total payments from the medical aid amount to about R53 000 so far.
With legislation requiring that medical aids may not discriminate by charging higher rates to higher claimers, there is a high level of cross-subsidisation. In addition, the government no longer permits medi-cal aids to sell a pure hospital plan and insists they include cover for 26 chronic illnesses. So, a heavy smoker who is overweight with diabetes will pay the same premium as a non-smoker who exercises daily and has no chronic medical problems.
With this in mind, people may opt not to have medical aid and only take out medical cover when they need it.
The government has given medical aids some room to manoeuvre, however, so that they do not only take on the sick and dying.
According to Pollard, most medical aids impose a 12-month waiting period for pre-existing conditions as well as a three-month general waiting period before claims may be made. In addition, for those who have never been members of a medical aid, the scheme can increase monthly premiums up to 75%.
Getting to grips with the self-payment gap
The most confusing aspects of medical aids, about which most people complain, are the thresholds and the self-payment gap.
Some medical aids, such as Discovery Health, offer an annual threshold for their top-end schemes. This is an insurance that members purchase so that, if they spend more than their day-to-day medical savings during the year, there is a safety net if they need additional out-of-hospital cover.
The self-payment gap is the difference between what members have spent out of their medical savings and the level at which the threshold kicks in.
For example, with Discovery’s Classic Comprehensive cover, the annual medical savings account is R4 800 for the principal member. The annual threshold kicks in at R5 000, giving the member a R200 self-payment gap. This gap widens for less expensive options such as the Essential Priority, which has a medical savings account of R3 012 for the principal member but a threshold of R5 500, giving a self-payment gap of R2 488.
With legislation set to change next year, members will no longer be able to select their level of medical savings, which will be determined at 25% of total contribution, so one cannot narrow the self-payment gap.
While this may seem simple, it is complicated by the fact that only Discovery rates contribute to the threshold level. The Discovery rate is what used to be referred to as the medical aid rate.
The government has made recommendations for what medical practitioners should be paid and each medical aid has come up with its own set of tariffs.
While Discovery will refund the full medical practitioner’s bill out of the member’s medical savings, when calculating how much of the threshold the member has accumulated, it uses the straight Discovery rate.
As an illustration, the Discovery rate for a GP may be R130 but he or she charges R200. Only R130 accumulates towards the total threshold of R5 000. So, although members may use up their medical savings accounts, if they use doctors who charge private rates or charge over-the-counter medication to the medical aid, they will find their self-payment gap wider than expected.
If members are concerned about being unpleasantly surprised by the self-payment gap, one option would be to request the medical aid to refund them at the lower tariff so that, over the course of a year, they self-fund part of their daily medical expenses.
They should also avoid buying vitamins or other over-the-counter medicines through their medical aid. As an example, pharmacies often charge less for, say, Panado paid for with cash than through a medical aid. — Maya Fisher-French