Khanya asks: Should I just start a hospital plan as I’m still young, very fit and live a healthy lifestyle, or should I still try get into a medical aid?
Maya replies: It is very important to understand the difference between a hospital plan sold through an insurance company and a hospital plan which is part of a medical scheme.
According to Andrew Edwards, principle officer of Liberty Health, short-term insurance hospital plans are not regulated by the medical schemes council and offer very limited cover.
They can also cancel the cover at any stage if, for example, your claims became too high. As there is no regulator or ombudsman for this product, you will have nowhere to complain if you wish to dispute a claim.
Medical schemes are required by law to offer hospital plans that include prescribed minimum benefits (PMB). These cover a range of chronic conditions including diabetes, heart conditions, HIV etc.
Edwards says that if you shop around you will find a hospital plan through a medical scheme that does not cost much more than the short-term insurance product but which provides you with broader cover which, most importantly, is guaranteed. A medical scheme may never discontinue your cover or increase your premiums based on your claims record.
Late-joiner penalties
One also needs to be aware of late-joiner penalties, which apply to people joining a medical scheme for the first time after the age of 39. Even if you had a break of membership for more than 90 days, a late-joiner fee can be applied and will continue for life even if you change to a new medical scheme.
For example, if you only joined a medical scheme at the age of 40 you would pay 10% more than other members. If you only joined at age 52, your premium would be 20% higher. So it is worth taking out an entry-level product with a medical scheme when you are still young.
When looking at medical aids, stick to the larger, well-funded schemes like Bonitas, Discovery, Fedhealth and Liberty Health. There have been many casualties with smaller funds being liquidated or amalgamated into larger schemes.
In October, Smart Money will be doing an in-depth review of medical schemes as it is around this time that members receive notification of their benefits and premiums for the following year.
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