Health insurance makes sense for those not on medical aid schemes
Very few South Africans have medical cover
Data show that only 8.9million South Africans have access to medical aid. Those who are fortunate enough to be on a medical aid face a quagmire – medical aid schemes have over the past two years responded to Covid-19 by providing relief to their members by deferring increases, dipping into reserves to reduce increases and announcing delayed increases above inflation.
For example, medical schemes like Discovery deferred their increases for 2021 to the middle of the year, however, their 2022 increase is now happening on May 1 with an average increase of 7.9%.
Momentum will have a 6% increase from September 1, Fedhealth is increasing by an average of 5.5% from April 1, and Bonitas has increased by an average of 4.8% since the beginning of the year.
Lee Callakoppen, principal officer of Bonitas Medical Fund, said the deferment of increases created an anomaly for companies, medical scheme members and consumers.
“The past year has shown that the actual contribution increases experienced by members, after the deferment period, is typically higher than the industry average. An example is a scheme that offered a contribution deferment for the first six months of 2021, but then applied a 5.9% contribution increase, when the industry average was 4.6%,” he said.
“This results in members being worse off compared to the scheme that applied a lower, market-related contribution increase from the beginning of the year. Schemes implementing a contribution deferment are already applying above market average contribution increases.”
Note that medical aid schemes should not be confused with health insurance, as these two differ vastly in terms of financial coverage in South Africa. Medical aid schemes cover expenses associated with the necessary medical treatment, whereas health insurance ensures that when you are in need of financial coverage for medical purposes, you receive a fixed lump sum.
“If you don’t have any form of medical cover, there are some good reasons for you to consider medical insurance,” says Cheslyn Jacobs, Tymebank head of sales and service. Five reasons why it’s wise to have some form of medical insurance in place:
1. Day-to-day illnesses and injuries are covered
With the right medical insurance product, these costs are covered by your insurer, so you do not have to bear the brunt of annually incurring costs that you have not budgeted for.
2. Casualty cover is not the same as hospitalisation
If you are injured in an accident, you may need to be hospitalised, which in itself requires cover.
3. A financial back-up for the unexpected
Just like car and household insurance covers you, medical insurance covers those unexpected events that can set you back financially, potentially meaning you have to dip into your savings or even turn to family or friends to assist. As such, being prepared is wise.
4. It’s more affordable than medical aid yet is more focused on its benefits
Unlike medical aid, medical insurance is not governed by the same medical aid regulations that require that all medical aid products offer a set of minimum benefits known as Prescribed Minimum Benefits. This cover includes 270 inhospital, life-threatening procedures and 26 listed chronic conditions. Medical insurance, on the other hand, is far more affordable and is primarily focused on out-of-hospital primary care expenses, including general practitioner consultations, prescribed medication, basic dentistry and some optometry cover.
Medical insurance is more affordable than medical aid
5. Our changing lifestyles make us more unhealthy
Covid-19 has also reminded us how fragile our health can be and how quickly we can become ill. It is for this reason that you should have some form of medical insurance in place that covers you for day-to-day needs, specialist visits or offers basic radiology or pathology.