Budgets were strained, if not shattered, in 2022 due to inflation rates reaching 10-year highs. Since then, estimates for 2023 have shown that the cost of living will continue to rise far faster than pay increases.

The South African Reserve Bank announced increases in the repo rate, putting greater pressure on the SA consumer as a result of rising interest rates and subsequent bond and other credit facility obligations.

The latest increases in electricity prices above 18.65% will also make household finances worse. This holds true for medical expenses as well, as inflation is predicted to be between 9% and 12% in 2023.

It seems sensible to just buy what you can afford, given the current state of the economy.

However, it’s critical to recognise that unpaid medical bills incurred by family members who lacked adequate insurance are the leading cause of bankruptcy declarations globally.

Therefore, it is essential to look into less expensive healthcare coverage options. This includes looking into health insurance as well as purchasing less expensive options under your medical plan.

“Before deciding issues that concern your future, you need to do as much research as possible,” said CEO of medical aid scheme Profmed, Craig Comrie.

He claimed that although medical help and medical insurance may appear to be the same thing, they are two different things.

“While medical aid provides comprehensive cover and tends to be more expensive than medical insurance, there are more to these products than just the price point. It’s better to have cover than no cover and both products provide cover for when you’re ill, there are distinct levels of cover.

“Consumers tend to be confused when it is time to compare the two, but ultimately it comes down to value versus price. If you need peace of mind and a full range of benefits, then you need a medical scheme. If you are looking for basic cover, then you are probably looking at health insurance,” said Comrie.

He added, “There is an area of significant overlap in pricing and some health insurance products are more expensive than many medical scheme options and so you need to carefully look at the benefits and limits of the products you are considering”.

The advantages of medical aid

All medical schemes are registered with Council for Medical Schemes (CMS), and one of the requirements for registration is that even the cover on the more affordable options, offer a reasonably comprehensive set of benefits known as Prescribed Minimum Benefits (PMBs).

Medical schemes are owned by its members who belong to the scheme and so there are no shareholders.

Members of medical schemes control and elect a Board of Trustees who make all the critical decisions of how the scheme is managed.

Medical schemes provide a minimum but comprehensive set of cover (PMBs).

On average they pay 90% of your premiums to cover medical claims.

They provide a range of flexible ways to cover day-to-day medical expenses such as doctors’ visits, optometrists and medication; certain plans may come with a medical savings account for these claims.

Eight-five percent of payments are made directly to doctors, hospitals or pharmacies (or if you pay upfront, you claim a refund back from your scheme).

They profile and contract healthcare practitioners and hospitals who provide the best quality of treatment.

Medical aid usually has different cover options, depending on you and your family’s needs, which range from Hospital Plans to Comprehensive cover.

Medical insurance or hospital plans are not necessarily the cheapest option.

“You have to know your health status before you downgrade your health cover. Do you have a chronic condition? Do you require ongoing dental care or require routine examinations and tests for a specific ailment or disease?

“All of these expenses are likely not to be fully covered by your hospital insurance, and any remaining balance must be paid out of your pocket.

“Health insurance products can design very limited cover and therefore can be cheaper, should you have no other alternative,” said Comrie.

A hospital plan or health insurance still comes with terms and conditions, such as:

Medical insurance products are provided by registered insurers with shareholders who require the insurer to turn a profit.

If your medical insurance does not cover all the costs, you will have to pay the shortfalls out of your own pocket.

Medical insurance pays out set amounts selected when taking out the cover (for example per hospital visit or procedure with overall annual or per event limits).

Medical insurance usually offers limited cover for day-to-day medical expenses such as doctors’ visits and medication.

Medical insurance does not have cover for prescribed minimum benefits as laid out by the Medical Schemes Act.

Medical schemes that offer affordable products may be the best option for you if you’re still young and healthy.

Medical Scheme coverage is usually a better option if you already have a family, plan to start one, or need chronic medicine.

Based on your demands and medical expenses, you might even be better off with a hospital plan only, rather than comprehensive cover.

Article credit: https://www.iol.co.za/lifestyle/health/know-the-difference-between-a-medical-aid-scheme-and-medical-insurance-the-two-are-often-confused-4ab93892-f7b5-43f4-bcbe-27696998017d

Know the difference between a medical aid scheme and medical insurance the two are often confused image