Affordable Medical Aid Review for 2019
25 percent possible savings on Fedhealth’s new model
At a time of recession when most consumers are battling to make ends meet, Fedhealth has introduced a revolutionary funding model which can save members up to 25 percent of their monthly contributions.
Traditionally, as much as a quarter of members’ annual contributions are placed in their fund’s medical savings account (effectively as a loan) and used to pay for day-to-day benefits. The member is then required to repay this loan over 12 months irrespective of whether the member needs this amount or not. In an innovation likely to be rapidly copied, Fedhealth has turned this model around to allow members to only start paying for their day-to-day benefits if and only when they actually need those benefits. Only when they access this funding will they be required to pay back that amount over 12 months, interest free.
Jeremy Yatt, Principal Officer, says “This can make a meaningful difference to consumers’ financial position and represents a radical departure from how other medical schemes in South Africa model their funding of day to day benefits. The norm is to charge members for day-to-day benefits from the beginning of the year regardless of whether they have seen a doctor or purchased medicine or not.”
The new solution is a response to the findings and recommendations highlighted in the provisional report issued by the Health Market Inquiry (HMI) which underlined the urgent need to change the way medical scheme options are designed, he explains.
“There is marginal space to innovate given the legislative constraints on medical schemes, yet our new model clearly proves medical schemes can and should find new ways to empower members by addressing their concerns around affordability, transparency and flexibility.
“The outcome of research among our membership base convinced us that members want more of a say over what their cover should be; how their daily benefits are used and they don’t want to pay for benefits they are not using. Up till now, there was not one medical scheme in South Africa offering that level of flexibility. Medical schemes have been doing the same thing for decades, with negligible differentiation between schemes,” says Yatt.
Fedhealth is now also the only medical scheme to offer members a reduced monthly rate – via its MediVault and Wallet. Based JEREMY YATT, PRINCIPAL OFFICER
on each member’s unique profile and the core benefit bundle they select, a pre-approved amount is placed in their individual MediVault at the beginning of the year. This amount available is not pro-rated and funding of claims is done in a similar way as in a traditional savings account, except that members only pay for it once they use it.
“When the member needs to pay for day-to-day expenses, they simply transfer the funds they need from their MediVault into their Wallet and only then start paying back those funds, without having to pay interest,” explains Yatt.
A pay-when-you-need-it medical savings account was not the only innovation. To increase the element of added choice it offers four core benefit bundles specifically tailored to different lifestyle requirements and which can be personalised even further to suit individual needs.
“All core benefit bundles come pre-packed with value-added benefits covered from Risk, not from the MediVault and Wallet,” he concludes.