What should I look for when choosing a medical aid?
There are over 40 open medical schemes in the market, offering over 200 options, then there are so many factors to take into account and points to be considered that one can easily make the wrong choice, and not from a lack of trying!
So, where do I start?
Plan your year ahead and assess what you and your family’s needs are going to be. Ask yourself this question: “What do I need for the next year?”
The next step is to look at affordability. You need to look very carefully at how much you can afford to pay each month and compare that to what benefits you need. This comparison of what-I-can-afford versus what-I-need is difficult as, more often than not, what we need is more than we can afford!
Affordable options with low benefits may bring additional expenses as the benefits will be depleted very early in the year and you will be obliged to then pay monthly medical aid contributions as well as expenses that they have not covered.Opting for a more expensive option may be a better route to follow as you can budget for these monthly costs upfront and then rest assured that all, or most, of your medical expenses will be met.
Choosing the right Medical Aid
The best is to ask current, and former, scheme members and don’t just ask one person, ask a few!
• How long has the scheme been around?
• Are annual price increases on a par with other schemes? (Abnormally high increases may indicate that they did not price their benefits and rates correctly in previous years and ran at a loss as the claims would have exceeded the contributions received.)
• Did they recently reducebenefits and if so, which ones and by how much? (Many schemes are introducing or increasing co-payments for certain in-hospital procedures.)
• Administration and Procedures:
• How long does it take before you speak to a real person when you phone their call centre?
• How long does it take them to pay out for a claim?
So, you have found a company thatyou feel comfortable with, now you need to choose the right plan. As mentioned earlier, this is a vital part of this process.
Hospital cover is included in all plans but the level of cover may vary. Schemes will either provide cover at any private hospital or else they may specify a certain network of hospitals that you need to use. There may also be a rand limit in terms of the amount of hospital cover you will receive.
Some medical schemes stipulate treatment at provincial hospitals and NOT private hospitals!
•Schemes that limit hospitalisation to certain networks and with Rand limits in place may be more affordable.You must check the reimbursement rate, the rate at which medical plans pay out hospital claims. Most schemes pay out at 100% of the National Health Reference Price Listing (NHRPL) but this rate can increase to 150%, 200% or 300%, depending on the plan that you choose within the scheme.
•In-hospital co-payments (deductibles) have become very common. These are mostly for scopes and investigative scans that are done in-hospital or in a day clinic and include MRI/CT scans and most scopes such as colonoscopies and gastroscopies. You would have to pay this amount from your own pocket (non-refundable) and the scheme will pay the rest within the limits of their stipulated payment rates (NHRPL, 150%, 200%, 300% - depending on the scheme’s in-hospital payment rate).
• Take home medication is the medicine that you take home with you when you are discharged from hospital. Many schemes pay for the take home medication from your day-to-day benefits (or medical savings account) and not from in-hospital benefits.
As with any insurance: the more you pay - the more you are likely to get. Remember that your in-hospital cover only includes your stay in a general ward. Private wards are seen as a luxury that will cost you extra and probably not be covered by the plan.
This is the benefit most often utilised by members and is often exhausted before the end of the year requiring members to then pay from their own pockets. There are three types of day-to-day provisions: traditional, new generation and network options.
•Traditional offers you a set limit per benefit, per year, dependent on family size and plan. Any and all, unused benefits are forfeited at the end of each year. Members find traditional options easier to use as they understand what their benefits are for the year.
•New generation options employ the savings account method, whereby part of the member’s monthly contribution goes into an account to fund day-to-day expenses. Members spend their money on benefits that they really need as opposed to traditional options that provide for all day-to-day requirements, sometimes resulting in insufficient benefits in one area and unneccessary and unused benefits in another. Savings left in the account at the end of the year are carried over to the next.
•Network options compel members to make use of specific providers for their day-to-day benefits. In return for this loss of choice the option is generally affordable and usually offers unlimited basic day-to-day benefits. If you have used the same General Practitioner (GP) for the past ten years and they are not on the scheme’s network, you would have to change your GP.The top plans of four top schemes inSouth Africa are listed below, one can clearly see how the benefit limits vary per scheme.
* subject to pre-authorisation by the schem
Chronic medication is defined as medication that needs to be taken on a daily basis for a period of three months or more. It is very important to note that just because you have a condition, and take medication for it, this does not mean that the scheme will cover it. All schemes specify criteria that members need to meet before the medication can be covered as a chronic condition.
All schemes in South Africa are forced by legislation to cover prescribed minimum benefits for 26 chronic ailments. In an attempt to limit this massive cost some schemes will impose formularies (such as the use of generic medication). They may also restrict you to certain pharmacies or providers for your medication. If you do not, or cannot, use the formularies or specified providers, you will have to make a co- payment or may even have to pay the entire amount out of your pocket.
Additional chronic conditions (over and above the legislated 26) are covered depending on the plan you chose. Schemes can decide what additional chronic benefits they will cover so before choosing a plan, identify yourchronic conditions and determine if these are covered by your plan of choice. As an example, a lot of members use Hormone Replacement Therapy (HRT) medication. This is not covered by all schemes or plans.
Tax implications and benefits
Section 18 of the Income Tax Act allows deductions for certain medical expenses if the total cost of those expenses exceeds 7.5% of the taxable income. This 7.5% does not apply to persons with a disability who can claim back all medical expenses incurred by their family and any costs associated with their disability.
NB: Medication for sexual dysfunction is not covered as a chronic benefit on any medical aid. Schemes may cover it out of day-to-day benefits or, in some cases, as over the counter medication.
From 01 March ‘09 monthly tax-free medical aid scheme contributions have increased to R625 per month for the first two beneficiaries and R380pm for each additional beneficiary BUT, the entire medical aid contribution of a PWD will be tax deductible at the end of the tax year.
All expenses incurred, that are related to a disability, become a tax deduction at the end of the tax year. This means that if you buy a vehicle and modify it to suit your needs, you cannot claim the cost of the vehicle but you can claim for the expenses you incurred to modify the vehicle.
Amounts that medical schemesdo not cover also becometax deductions. For example, if you buy a wheelchair for R50,000 and your scheme only covers R41,000 you would be able to claim the difference (R9 000) as a tax deduction at the end of the tax year.
Getting the best advice from the right person or organisation is paramount when deciding on a medical aid scheme and plan. Choose your financial advisor carefully. Find a financial planner or organisation that specialises in medical aid planning to do a full needs analysis with you and assist you with this very important decision and explain to you, in detail, how the chosen product works.