Medical cover is often seen as a grudge purchase, as until you require medical care, you are not reaping the benefits of the cover. Added to this, Aon a risk management, insurance and reinsurance brokerage provider, noted that medical scheme costs are quickly exceeding affordability. Medical aid costs are set to increase between 10-15% in 2017.
“Medical scheme increases over the past two decades have shown a steep hyper-inflationary trend, while in many instances levels of cover have reduced in a bid to keep benefit plans affordable,” revealed Aon. In other words, you may be paying more for less cover.
However, the increases have largely been implemented to cover the soaring fees of medical service providers, as well as the increase in diseases such as cancer, diabetes and heart disease. Members are increasingly making use of their benefits, and together with new medical technology and the regulatory requirement for medical schemes to maintain solvency reserves of at least 25%, this has added to the pricing pressures faced by medical scheme providers.
“Pressure is also due to healthcare providers, who are likely to increase their fees in 2017 by amounts greater than CPI, which means many South Africans could face more out-of-pocket medical expenses going forward,” added Aon.
Private healthcare costs also face the challenge of a lack of supply-side regulations. This means that medical practitioners and specialists can charge what they like for their services. However, this is currently under review by the Competition Commission within the border scope of an inquiry into the entire supply chain of the private healthcare sector.
Gavin Griffin, business unit head of Aon Employee Benefits, noted: “With mounting costs, many are looking at alternatives such as primary care options; downgrading their healthcare cover; changing to a different provider; or in some instances, forgoing cover completely. While the cost pressures are felt all around, low to middle income earners are hardest hit given the additional cost pressures of living costs, education, transport and so on. In many instances, private healthcare costs can account for up to 30% of monthly household expenditure.”
What to consider before changing your medical aid cover
When thinking of changing medical aid options, it is important to keep in mind the benefits that come with the option you already have and those that you are considering changing to. Also take note if the benefits have increased in line with the contribution increase, stated Griffin.
“Where costs and benefits on a medical scheme are of concern, you could consider moving to a lower benefit option within the same medical scheme. By doing so, you can avoid waiting periods that are typically associated with a complete change in medical scheme provider,” revealed Griffin.
Generally you can move to a lower benefit option within the same medical scheme provider at any time during the year. If you wish to move up a level, you will usually have to wait for the beginning of the benefit period (normally January). “Some schemes would allow a change during the year as a result of a ‘life changing event’, such as an addition to the family,” noted Griffin.
However, prior to making any change to your medical scheme option, ensure that you compare all the benefits to make sure that you are not financially compromised by any change.
“It’s a task best undertaken with the guidance and advice of a professional broker who can do a thorough needs analysis; review your claims history and map this back to your budget. Based on this information, your healthcare broker can advise on the best plan to ensure that your healthcare needs are comprehensively covered and that any change won’t leave you compromised or facing hefty out of pocket expenses that you cannot afford,” advised Griffin.
Tips to keep in mind when comparing healthcare and benefit options
- Don’t change medical schemes or benefit options simply because the contribution is lower. It is important to consider the actual benefits, as well as exclusions, value adds and service delivery, together with you specific healthcare needs. This will include, various doctor and specialist visits, medication, hospital stays, as well as optometry and dentistry.
- Having 100% cover does not necessarily mean all costs are covered. Some specialists and in-hospital charges can be up to 400% of the benefits offered by a medical scheme. If you have 100% cover, that means there will be a 300% shortfall which you will have to cover out of your own pocket.
- A gap cover policy may help to cover the shortfall left by the medical scheme for a monthly premium.
- “Many consumers are opting for more affordable hospital cover plans only, and then topping up cover with this gap insurance to address any shortfalls that may arise. They then also take on the risk of having to fund any day-to-day expenses for general practitioner visits, dentistry, optometry and so on from their own pocket. An analysis of your claims history and state of your health and your dependants will be important in assessing whether such an option will work for you,” highlighted Griffin.
- Some medical schemes limit hospital pay-outs to a certain amount per family member. As a result, if more than one family member requires hospitalisation in the same year, you could face considerable financial stress.
- When changing medial scheme providers, a waiting period may apply. This can range from a general three month waiting period, up to a 12 month condition specific waiting period for certain conditions.
- When looking at changing medical aid providers, keep in mind if there are designated provider networks. If the benefit option of medical scheme provider you are selecting has a designated provider network, ensure that they have healthcare facilities and practitioners in your area. If you visit practitioners or providers not on the list you could face high co-payments, or in some instances, be responsible for the entirety of the costs.
“Only after considering your claims history; state of health; and level of cover required by you and your dependants; as well as what level of self-funding you are able, or willing to bear; can you make an informed choice. It’s a role best undertaken with the guidance and advice of a professional healthcare broker who can do a thorough needs analysis and then investigate the benefits options provided by a reputable medical scheme to meet your needs and budget,” added Griffin.
