With plans that have a savings facility as part of the day-to-day benefit, you get an annual allowance, known as your savings account. It is funded by a portion of your premiums over the year, although the full amount is available to you in January.
There is no financial advantage to a savings account, since all of the monies are paid by you. The scheme does not “top up” the account. In addition, a scheme can limit what you spend the money on, how much you spend per benefit and at what scheme rate claims will be paid from the savings account.
The main advantage of having a savings account is that the full year allowance is available for you to spend in January. It also forces you to be disciplined in saving for your day-to-day expenses.
Some plans have a day-to-day benefit fund that is not directly funded by a portion of your premium. Different schemes refer to this by different names (allowance, extra funds, day-to-day fund, extended benefits etc).
This extra fund can be in addition to a savings fund, or can exist on its own.
If a plan has a savings fund and an “extra fund”, often day-to-day claims are paid from savings first, and when depleted the extra-fund will kick in.
Schemes enforce various rules and sub-limits on how this extra fund can be used and what it pays for. See each plan, and individual benefit for sub-limits.
Self payment gaps, threshold and above threshold
Some plans (the comprehensive ones) have a day-to-day benefit made up of a savings account followed by a self payment gap until a pre-determined threshold is reached. Once the threshold is reached, the scheme will start paying for day-to-day claims again.
For example, if a plan has a savings account of R10,000 and a threshold of R15,000 that means that the first R10,000 of your day-to-day expenses will be funded from savings account, after which you will pay R5,000 out of pocket for your day-to-day expenses. Once you have reached the threshold (ie once you have contributed the R5,000 out of pocket and reached a total of R15,000 for your day-to-day expenses), you have reached the plan’s threshold. All further day-to-day expenses are paid by the scheme, up to the Above Threshold Limit (ATB).
Some plans have unlimited above threshold limits, which essentially means that once you have paid the self payment gap, the scheme will cover all day-to-day expenses until the end of the year, subject to scheme rules.
Be careful though, as often a scheme will not add a full medical bill when working out if the threshold has indeed been reached. This can get pretty complex and frustrating, and is a cause of much confusion. In brief, this is how it works:
- In January, you get a bill from your doctor for R500
- The scheme rate for the service is only R350, but the scheme pays the full R500 from your Savings.
- You continue to accumulate bills, and pay the full self payment gap by August. You expect the threshold benefit to kick in in September.
- Your scheme informs you that you need to pay more than your self payment gap, because it needs you to also pay the R150 difference for the January bill. When adding up the bills to get to the threshold amount, the scheme only adds up bills at up to 100% scheme rate, regardless of the actual bill amount.
- In addition, a scheme will usually cover all bills in the above threshold benefit at 100% scheme rate, thus still potentially leaving you with an excess that you have to pay out of pocket.