It is medical aid scheme renewal season and now is the time when you need all the advice you can get to make the right choices as you find yourself under massive pressure to cut costs, while ensuring access to quality private healthcare in a crisis.
“If you are a member of a medical aid scheme, you will have received notification of the increases to your contributions and benefit changes for 2023 by now. Some schemes announced that increases will be deferred to April 2023, while others announced increases averaging 6% and more from 1 January 2023,” says Martin Rimmer, CEO of Sirago Underwriting Managers.
He expects most increases to be in line with medical inflation which is usually around 3-4% above the consumer price index (CPI).
“Across the board, medical schemes saw an increase in the cost of care over the last year as benefit utilisation returns to pre-Covid levels, while hospital admission costs have increased by 21% compared to 2019 levels.”
Fundamentally, Rimmer says, we are heading into an extraordinarily challenging time and the need for financial prudence when it comes to your healthcare funding and access to quality private healthcare, has never been more critical.
“South Africans are under massive pressure to balance soaring living costs which have sky-rocketed in a hyper-inflationary economy with massive increases in the cost of living, food, fuel, electricity and coping with load-shedding. In many households, the cost of medical scheme membership is easily 30% of total monthly household income.”
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Medical aid scheme membership non-negotiable
However, he says, it is simply non-negotiable to have medical aid scheme membership given the collapsing public healthcare system. The health ombud warned parliament that the public health sector is in such a dire state and work to raise standards is progressing so slowly that most facilities will not make the grade to provide services under National Health Insurance (NHI).
“Another reality is that, while medical scheme contributions increase every year in a bid to keep pace with healthcare hyperinflation, most medical scheme members will be paying more for the same or less medical scheme benefits and paying out a far greater percentage of out-of-pocket healthcare expenditure that is not covered by their medical scheme benefit, notably for members on core plans.”
Rimmer says the growing quantum of large gap claims values is a key indication of this growing buy-down trend. “While the average larger in-hospital gap claim is between R10 000 to R20 000, we are seeing the frequency of mega claims in excess of R40 000 on a daily basis for tariff shortfalls not covered by medical schemes that members would have to pay from their own pockets if they had no gap insurance.”
He points out that it is not only members on lower benefit options who face these shortfalls.
“Even on comprehensive medical scheme benefit options, medical scheme members face onerous tariff shortfalls for in-hospital procedures.”
Medical aid scheme members have until the beginning of December to make any changes to their medical scheme options for 2023. In the current environment, many members are looking to save on costs, while maintaining access to private healthcare. However, they have to consider many interconnected variables with any benefit or option change.
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Consider this when thinking about changes in your medical aid
Wesley Birch, an independent financial planner with Sam Goudvis & Associates, says factors such as your personal needs and health conditions and that of your dependants come into play, as well as your claims history, affordability, day-to-day spend and value for money.
He offers the following advice to consider when reviewing your medical scheme benefit option:
- What is your current day-to-day expenditure on healthcare and do your existing benefits provided sufficient cover, too much cover, or were you left out of pocket? Either way you are probably on the wrong option and it warrants a closer analysis.
- Are you or any dependants registered for a chronic condition and does it qualify under the 27 regulated chronic conditions or as an additional disease listing for cover? Consider whether the premium saving on a lower benefit option is worth the cost of the additional chronic medicine.
- When you pay less on your premium, you will receive less cover and benefits and therefore you must understand what that pay-off will be, that you are comfortable with the level of self-funded risk you can afford to take on and that you make provision for it.
- Get Gap Cover to protect you from shortfalls on in-hospital treatment and specialist charges, which can be anything from a few thousand rand to over R100 000. If you are on an option that covers 100% or 200% of tariff charged, you will face shortfalls when you consider that many specialists charge upwards of 500% of the medical scheme tariff. Also remember that most lower cost medical scheme options insist on using designated service provider networks and if you opt out, you are heavily penalised.
- Benefit options that pay for hospitalisation only means that you will pay for all day-to-day primary care, such as GP visits, dentistry, optometry, radiography, CT scans and medication.
- If you consider moving to a lower benefit option, try and do so within the same medical scheme to avoid waiting periods, while you have an opportunity to either buy-up within the scheme for better benefits or buy-down for lower contributions.
- Be aware of waiting periods if you plan to move between medical schemes. Medical schemes can impose a 3-month general as well as a 12-month condition-specific waiting period if you join for the first time ever or belonged to your previous medical scheme for less than 24 months.
- Before buying down, make sure that your current benefit needs are comprehensively reviewed to ensure that buying down will not leave you out of pocket or without benefits that you simply cannot afford to self-fund.
- As public healthcare facilities face collapse and become dangerously precarious, the need to secure your access to quality private healthcare has never been more crucial. Above all other expenses, take care of your medical scheme membership first and do not leave this until you are older, thinking you will get cover when you need it. Remember that if you are older than 35 and you cannot prove previous membership of a medical scheme for more years than you are older than 35, you will be charged a late-joiner penalty.
The most crucial aspect right now is to secure your healthcare solutions, such as medical scheme and gap cover benefits which will be fundamental to carrying you through a potential health crisis, which could possibly result in a significant financial conundrum, he says.