By Angelique Ruzicka, editor, Justmoney.co.za
Private medical care in South Africa is incredibly expensive. However, buying medical scheme cover in order to afford going to a private care facility is also expensive and costs increase every year. Last year, Discovery Health, the country’s largest open medical scheme said it would increase the contributions on all its options by 8.9%. Increases by competitor, Fedhealth, meanwhile range from 7.9 to 10.9 percent. Small schemes increase their premiums too. KeyHealth, for example, also announced an 8.9% contribution increase.
So what can you do to reduce the impact of such price increases? Some ditch their medical aid altogether but experts warn against doing this. “If a member can no longer afford a comprehensive medical scheme contribution it is always better to downgrade to a lower option (possibly a hospital plan) rather than opting out altogether leaving yourself financially exposed. Some people are opting for “hospital cash-back” plans which appear to provide generous cover, for example R5000 per day in hospital. However, relying on this is extremely risky as these products severely under fund the actual cost of hospital events,” says Peter Jordaan, CEO of Fedhealth.
The best time to switch
Switching or downgrading your scheme is one of the ways you can save money. The best time to switch or consider downgrading is towards the end of the year. You can also switch now (in January) if you haven’t dipped into your medical savings yet.
“During the last quarter of every year medical schemes release their benefits for the following year. It’s the opportune time to re-assess your medical aid and decide whether the benefit structure of your current scheme/option is adequate to cover your needs for the following year. Each member should assess their current healthcare needs based on their age, family composition and health status and select an appropriate option which will cater for this level of need,” explains Jordaan.
Penalties fees and waiting periods
The key to avoiding penalties or paybacks is to switch at the right time. “[There are] no fees involved, and no penalties if members give due notice in terms their current medical scheme rules,” says Gavin Griffin, the business unit head for Healthcare at Aon Hewitt.
“Members are generally only allowed to change options within their existing scheme once a year for the following year during the renewal period. The option change will be effective 1 January. Some schemes like Fedhealth, however, allow members to upgrade to a higher option anytime throughout the year in the case of a life changing event, for example pregnancy or on diagnosis of a dread disease.
“Should a member decide to leave their current medical scheme and join another one at any time throughout the year then the underwriting provisions as contained in the Medical Schemes Act Section 29 (A) may be applied.
“Changing schemes during the year may result in amounts owing to the scheme you are leaving, due to advanced savings utilised,” adds Jordaan.
Remember that a waiting period may apply when you switch to a new scheme. “The only time no waiting period may be imposed is where this switch is as a result of you changing your employment and as a result thereof you are forced to switch your medical aid. In any other circumstances, waiting periods may be applied as per the provisions of the Act. This can either be a three month general waiting period, a 12 month condition-specific waiting period or both.”
The waiting period which may be applied will depend on two factors: The break in membership between your previous medical scheme and your new medical scheme and the period of continuous membership on your previous medical scheme.
Where can I get advice?
Switching to a new medical scheme is fairly simple. “The scheme application form needs to be completed and submitted. The complication to be taken into account is that your current medical scheme may have a notice period of up to three months which will prohibit you from joining another medical scheme during this period,” explains Jordaan.
If you are uncertain about what to do when it comes to switching or downgrading your scheme it’s best to consult a registered financial adviser specialising in medical schemes. The Council for Medical Schemes website have a list of all accredited medical scheme brokers.