Stay in touch with the ever-evolving world of medical cover

With South Africa a meagre 49th out of 89 countries when it comes to its healthcare system according to the 2020 Global Healthcare Index, having medical aid is the best solution for guaranteeing rapid access to the world-class private local professional medical care available here when needed most.

Medical mishaps happen in life and the general consensus around going to a public healthcare facility is that it is something to avoid at all costs; the care and facilities in the rural areas are particularly poor. While there are some very good physicians in public healthcare, it is no secret that retaining them full-time in public practice is a challenge. 

Those who can afford medical aid are spoiled for choice; there are at least 20 medical cover schemes to choose from. The quandary comes in when considering what kind of cover. There are hospital plans, general cover plans, gap cover plans and comprehensive plans with in and out of hospital benefits, so it comes down to your budget and choosing wisely. Medical cover in this country, while perceived as a grudge purchase like any other insurance, is simply the sensible option if you can afford it. 

When deciding on what medical cover to choose, the number one consideration is to be realistic about what you can afford and then to compare like-for-like to determine the most appropriate plan. Have a monthly budget in place and this will make the decision about what plan to have easier. 

“Healthcare is the most complex industry in the world,” says Thoneshan Naidoo, principal officer of Medshield Medical Scheme. “The value that can be realised from a plan should be a primary consideration, rather than the cheapest option. The decision needs to be based around the health of your family and whether there are any chronic conditions, and then how rich the benefits need to be. 

“Then you need to consider what benefits you want, be it the basics or all the bells and whistles, bearing in mind that lifestyle diseases such as cancer, which can affect [people of] any age, will not be fully covered in entry level packages. 

“Access is the third important consideration. You need to ascertain if you are comfortable using a restricted medical network or if you want freedom of choice,” he says. 

“Generally, the older we get, the more medical cover is needed. The products on the market consider demographics and there are products geared to the needs of different age groups. Always research the co-payments that may be required by the different products, as these may prove expensive and may impact on affordability of any chronic disease treatments for cancer, diabetes, hypertension and other chronic conditions.”

Ettie da Silva, principal officer of Medihelp Medical Aid, says the current uncertain economic climate makes it more important than ever for medical aid members to have the assurance that they will continue to have reliable access to private, quality healthcare.

“Medihelp recognises the pressure individuals and families are under to ensure adequate medical cover and we are helping to make this possible for our members, with a weighted average contribution decrease and a price reduction for four plans in 2022,” she says. “This means that more than 50% of Medihelp’s members will pay less for their coverage in 2022.

“The scheme has also increased the value of available benefit amounts on all options and has introduced two new, very competitively priced plans for 2022, targeting new entrants to the market and families seeking affordable medical cover through a network solution.

“Medihelp has priced the 2022 products to alleviate financial pressure on members, recognising the strain being experienced by all.”

Da Silva says that similar to the industry, Medihelp has experienced an increase in solvency over the past two years and should conclude 2021 with a solvency ratio of above 43%. Given Medihelp’s financial stability and having provided for factors such as fourth and potentially fifth Covid-19 waves, tariff increases and increased utilisation, the scheme took the strategic decision to reinvest some of its reserves to effect price reductions and low contribution increases.

“Our intent is to not only assist members, but also increase our product range’s competitiveness, to become the solid alternative for people who consider price as the determining factor when choosing a medical aid plan.”

According to financial advisor Chanté Dunckley: “Without exception it will always be my view that no one-size-fits-all solution exists when taking individual needs into account. Stereotyping is the primary cause for lacking and improper financial planning. Individual needs are crucial when contemplating a medical aid and purpose-suited cover. 

“Pre-existing conditions and general health needs impact on supplementary expenses in relation to the family’s choice in terms of affordability and liquidity. Considerations include the need for regular dental, optometry or chronic conditions, planned surgery and pregnancy planning.

Social demographics

“Honest answers to the questions that need to be asked will determine whether comprehensive cover or a hospital plan will suffice.”

Dunckley says whether a limited plan, comprehensive or hospital cover is chosen, the family’s mobility, location and social demographic will determine whether network plans are adequate or whether they need unlimited medical access.

 She adds that it is most important for young individuals who are at the beginning of their careers and no longer belong to their parents’ plan, to realise that early membership to even a rudimentary or simple hospital network plan will save them a small fortune in late-joiners’ penalties later in life. 

“It is a fact that medical boards consider it unfair toward life-long members who have contributed substantial sums over time, to afford equal benefits to late-joining members who have chosen to spend their money on leisure expenses earlier in life — something often seen in a generation that tends to thrive on instant gratification. 

“Another factor all too often overlooked, is that medical savings accounts do not necessarily have to be administered by a medical aid, providing the individual does not benefit from interest earnings or the freedom of a chosen payee not associated with medical aids. 

“Where the main member is disciplined enough to open a private linked investment service provider (LISP) or unit trust account — and will save without

fail on a monthly basis for medical co-payments — these funds and the return on investment remain the individual’s to save or apply toward the purpose without restriction. 

“This is, however, an option that is suited to individuals with reasonable supplementary liquidity who do not necessarily need to benefit from the pro-rata advance benefit afforded by medical aids. This option can be attained over time where proper long-term financial planning has been practiced.” 

The Covid-19 pandemic has brought to a controversial fore the potential for updates and changes to cover. 

“Where penalties for non-vaccinated members are concerned, I am curious to learn whether this is constitutionally enforceable,” continues Dunckley. “Except in those instances where it is medically inadvisable for a chronically or terminally ill patient to compromise immunity and resistance by taking the vaccine, I am of the opinion that it should remain a recommended yet freedom-of-choice matter. 

“However, for the economy and industry in general and to facilitate fewer restrictions on trade, I believe incentivising members to participate in a national effort to flatten the curve is absolutely necessary.” 

Another extremely controversial subject is National Health Insurance (NHI) and its impact in the future on medical aid and insurances. 

As far as nationalising healthcare is concerned, the general consensus is that the government has not earned the nation’s trust that nationalised healthcare will equal the standard of a number of private healthcare services. 

Judging by the latest round of load-shedding, the country’s infrastructure, public administration and public fund management is in no way comparable to that of first world countries and healthcare is no exception. Interest groups also say the NHI will not strengthen the healthcare system, but could actually worsen it. 

Naidoo, on the other hand, says the NHI is battling bad publicity. “The negative perception is the result of the corruption and maladministration that we simply have to overcome. South Africa’s private medical sector is one of the best in the world — a national treasure we must protect and nurture. However, we need to unlock this kind of care for all. 

“It is possible to have a well-run NHI that works alongside the private sector. If we achieve this, we reduce absenteeism and improve productivity. There will be less debt and this will lift the GDP. The outcome would be a way to build the entire country to be better.” 

Gap cover

One big factor to take into account when choosing medical cover is that most medical aid plans have co-payments and sub-limits, with members more often than not having to pay the difference between what a specialist charges and what the medical aid covers.

This underlines the importance of medical aid gap cover, a short-term insurance product which pays the difference between the medical aid rates and the higher actual cost charged by a specialist, for example.

 “Gap cover has a place in the market where it serves a very specific purpose and it is often more affordable for a large family to pay a single premium toward gap cover than to upgrade membership status for each plan member,” says Dunckley. 

 The reality is that medical aid plans cover doctors, specialists, hospital fees, and medical services at a specific medical aid rate. While some healthcare providers charge according to the medical aid rate, there are many that don’t. That is because healthcare providers are free to charge whatever they want for their services. If the provider charges more than what the medical aid pays, the member will be liable for the shortfall that the medical aid doesn’t cover.

 For example, medical aid plan X covers up to 200% of the medical aid rate. If the healthcare provider charges 400% of medical aid rates, the medical aid will cover 200% and the member will be liable for 200%.

“From the Stratum Benefits’ side, we have four primary gap cover solutions,” says Anita Voigt, Stratum Benefits’ broker development consultant. “Options offer either 300% or 500% additional cover over and above what the medical aid plan provides, to cover the difference between what a doctor charges and what the medical aid pays from a hospital benefit.

“Co-payment cover refunds the upfront co-payments and deductibles that medical aids require their members to pay for certain hospital admissions and procedures, and our sub-limit cover takes care of the difference in cost when the medical aid pays part of the cost of an internal prosthetic device, renal dialysis treatment, MRI or CT scan, colonoscopy, gastroscopy or endoscopy from a sub-limit or annual limit.”

Stratum Benefits also offers cancer cover when the annual cancer benefit limit is reached, and members become liable for a portion of their treatment cost.

Voigt advises members with gap cover to always check that the option they are covered on provides the benefit they wish to claim from, whether shortfall payments are made to the doctor from the hospital benefit, and if the amounts the doctors or specialists charge are the same amounts that reflect on the medical aid statement.

“Check whether the claim you wish to submit forms part of a benefit or general exclusion,” she continues. “Also check if the co-payment you wish to claim is a co-payment imposed by your medical aid plan and only by your medical aid. If your specialist asks you to pay an upfront amount before a medical procedure is performed, it will not be refunded because gap cover is designed only to refund co-payments imposed by a medical aid.

 “Try and stay on top of the general terms and conditions of all medical insurance policies and have a good understanding of when gap cover applies,” she concludes.

Hospital plans 

Those with good health and a very limited family history of chronic disease may opt just for hospital plan cover. While a medical aid will cover both in and out of hospital medical costs including optometry and dentistry, with added incentives for members to maintain healthy living and lifestyles through wellness programmes, a hospital plan only covers in-hospital expenses, leaving the member to pay for doctor’s visits and medicine purchases.

“An added drawback is that an emergency room visit that does not result in hospital room admission means such a visit can add up to be extremely expensive if looking at consultations, x-rays and emergency room tests. While less costly in terms of premiums, medical financial planning opting to take hospital cover only should include a back-plan with a savings account on standby strictly set aside to cover such expenses,” continues Naidoo.

A hospital plan offered by an insurance company is a financial product and not regulated by the Medical Schemes Act, so a further caution is that cover can be pulled if claims mount up, or cover can be refused if you appear to be too much of a risk. Hospital cover providers are not obliged to cover the diagnosis or treatment of prescribed minimum benefits — those chronic diseases and conditions that medical aids, by law, have to pay for.

Hospital cash-back plans are where the insurance company pays out a lump sum directly to the policyholder for time spent in hospital, typically a predetermined minimum period. Cash-back plans should, however, be viewed as a top-up benefit for other health insurance policies, rather than as a family or individual’s primary medical cover. Also bear in mind that healthcare providers may demonstrate reluctance to provide treatment if this is the sole source of cover as they don’t have the security of knowing funds will be used to pay medical bills.

A safer choice is to opt for a hospital plan through a medical aid scheme that is covered under the Medical Schemes Act where membership cannot be refused and the scheme is obliged to cover hospital costs as well as prescribed minimum benefits.

In addition, some hospital plans offer additional cover such as limited day-to-day benefits. These may limit the insured to having to use a designated services provider network for non-emergency medical treatment in order to be able to claim for such expenses and not land up with medical bills or co-payments.

While there are drawbacks to having a hospital plan versus a solid medical aid, given the state of public healthcare and ever increasing costs of private care it is certainly better to have this alternative than no cover at all.

If it is about saving money, then rather choose 

in-network hospitals and doctors for procedures and treatment or a scheme with co-payments, topped up with adequate gap cover. 

Retirement health 

While some save and prepare for retirement their entire working lives, the reality is that many are not financially prepared for the spiralling cost of medical expenses in retirement. This underlines how important it is that whether early in a working career, nearing retirement or having transitioned out of the workforce, it is vital to understand and plan for growing medical costs as older bodies start to need greater medical care.

Not only are there the costs that will accrue over retirement, there may also be the costs of long-term, nursing home care.

“When we hit 60-plus, there is usually a spike in expenses as we become more prone to chronic conditions,” says Naidoo. “The more chronicity, the more medical interventions are required. This means it is essential to have good cover and to get this sooner rather than later. The reality is that we are an aging nation. At Medishield, 13% of our members are pensioners.

“The general feeling is that the older you get, the more benefits you need to have, and this means looking at the bonus or premium options that are out there.”

The amount of retirement income to budget on healthcare depends on overall health and age — as it does in the pre-60 demographic. The Catch-22 is that the healthier the person going into retirement will often allocate less to healthcare expenses, even though ophthalmology and dental care, for example, become increasingly necessary. With a healthier lifestyle comes greater longevity and a longer retirement.

One way to consider the concerns of retirement cover is to investigate and consider a medical savings account, although this may be a component of a medical aid plan. Despite the naysayers about the state of South Africa, this country has been ahead of the curve for many years in terms of its financial services offerings, thus medical savings plans in South Africa are quite innovative and their design has continually improved.

Available to members of all eligible ages is an option from Medshield, its MediSaver. Designed around independent individuals who want to manage their own healthcare expenses, MediSaver offers unlimited in-hospital cover through the Compact hospital network, while members manage their own out-of-hospital medical requirements through a personal savings account. As an added benefit, the MediSaver option offers an out-of-hospital maternity package.

Generally a medical savings account is a percentage of the insured’s contributions that are in a separate account, from which certain benefits can be paid. Just bear in mind that members cannot withdraw from a medical savings account in cash unless they have a credit balance and wish to terminate their membership. Any money not used at the end of a year is carried over into the next and should accumulate interest.

Those in their autumn years need to consider that a crisis at this time requiring home, hospice or a frail care facility could leave them dependent on a spouse or family members who may be unable financially to support them. This care can cost significantly more than retirement savings can allow for.

There is long-term care insurance available, which can mitigate the effects of a life crisis, but the conditions vary from insurer to insurer. Benefits can be paid to the insured or the long-term care provider. The younger the person is who signs up for a long-term care insurance policy, the more aggressively priced the premiums should be.

While the policies will differ in terms of the requirements and what will be covered, at the top of the list in terms of the beauty of this type of insurance is that it can help afford the insured the preservation of lifestyle and dignity.

The advice for those in the 60-plus category is to ensure that their financial planning around their healthcare remains structured and holistic within the financial resources they have available. The primary breadwinner should be absolutely transparent with their families about what the future may hold and have the right conversations, preferably before they retire.

Retirement is not a go-it-alone situation and should leverage from a lifetime of relationship-building with financial advisors and insurers, constantly evaluating the retirement planning that has been put in place.

Looking to the future, Naidoo says Covid-19 has changed the world, including in healthcare. “This new virtual world is extremely exciting for the industry. We are turning to technology power to democratise and healthcare will become more affordable, accessible and able to improve the quality of care. A healthier citizenry will truly benefit the entire country,” he concludes. — Rebecca Haynes