Medical aid and medical insurance are two very different products, and it’s important you understand the differences, so you can make informed choices.
Generally speaking, medical aid gives you better cover for claims, but it is also considerably more expensive.
With health insurance, if you choose your plan wisely (speak to your broker!) you should get access to private care when you need it most, but with the possibility – for serious cases – that you will finish treatment in a state facility.
Cost benefit
All medical aids have a generous benefit for hospital events – in fact, for most serious conditions the benefit is almost literally unlimited. If you need to spend 60 days in the ICU due to an illness, your medical aid will most likely pay. If you need extensive oncology treatment, dialysis or critical mental health help, medical aid will cover at least part of the claim.
It’s not reasonable to have such expectations from an insurance product. After all, the goal is to provide cheaper options than medical aid, and so some benefits have to be contained.
This does put patients at risk of no cover should their insurance benefit run out. Because it is impossible to foresee what emergency you might have in the future, or how much it will cost to treat, it can be difficult to choose an appropriate insurance plan.
PMB Cover
This is the most significant difference between medical schemes and insurance products.
Medical schemes have to cover the cost of managed care for 270 PMB conditions, in and out of hospital, regardless of the member’s plan. The plus side of that is that you know you always have full cover for any life threatening or serious conditions. On the downside, since it costs on average over R850+ per patient per month to provide this level of cover, medical aids are thus expensive and you are forced to pay for benefits you might not want or need.
Insurance plans have no such PMB requirements, and insurers can be very specific and selective about what they do and do not cover. On the minus side, it means you aren’t guaranteed the cover you might need in an emergency, but on the plus side you do have many options of more affordable premiums.
Unlimited Enrolment
Medical schemes cannot deny enrollment to anyone, regardless of their age or how sick they are. They also cannot exclude cover for any pre-existing condition for more than 12 months.
Insurers on the other hand, can deny cover of pre-existing conditions. Some insurers even define a pre-existing condition as one that is diagnosed in the first 6 months of their cover, and reserve the right to not provide cover for that condition going forward. Insurers can also charge higher premiums for senior age groups.
Waiting Periods
With medical aids, the maximum waiting period is 12 months, and that’s only for pre-existing conditions under certain circumstances.
Insurers can impose any waiting periods they want, and many impose 12-24 month waiting periods on regular procedures like tonsillectomy or hernia repair, even if they are not pre-existing conditions.
Cover for Newborns
With medical aid, newborn babies born to a mother with medical aid receive full cover immediately on birth, irrespective of any waiting periods or restrictions on either of the parents. That means the baby is guaranteed some level of private care if it is born with complications, or for a premature birth.
With health insurance, newborns usually share benefit limits with the mom, and have more onerous criteria for receiving full cover. For example, many insurers will not cover a baby if it is not discharged with a clean bill of health post-birth. That means that insurance won’t pay for further hospital admissions.
Family Composition
Many medical aids consider children who are full time students as child dependants up to the age of 25 or 26.
Insurers tend to limit age of child dependant to 21, after which the child is treated as an adult. Also, medical aids often only charge for 2 or 3 children, whereas insurers tend to charge for all children.
Late Joiner Penalty
Medical schemes might charge a late joiner penalty if you are over a 35 yrs old, and haven’t had continuous medical aid cover.
There is no late joiner penalty for insurance products.
Medical Schemes Act
Only medical aids are governed by the Medical Schemes Act, which has very strict restrictions on what medical aid schemes can and cannot do. This piece of legislation has proved extremely useful for members when they challenge how claims are paid.
Insurers don’t have such strict limitations, and can impose “small print” conditions unique to their product, and often you will only realise the impact when you claim.
Customisable Plans
Medical aid members don’t have the option of a non-hospital plan: they have to pay for a plan that covers hospital admissions. And they don’t have a choice to opt out of non-accident events.
With insurance, you can choose to only be covered for day to day expenses, or only accidents etc. You can customise your cover to your needs and wants.
Gap Cover Option
Medical Aid members have the option of supplementing their plan with gap cover.
There is no such option for insurance plans, although members can have multiple insurance products to extend cover.
Preventative Benefits
Because medical aids are legally required to pay for many claims, it is in their best interest to keep members as healthy as possible. Almost every medical aid plan comes with a lot of “extra” benefits, all focussed on wellness and preventative care. These can include mammograms, pap smears, PSA checks, flu shots, immunisation and more. There will also be managed programmes that help with oncology, spinal problems, maternity and more.
Few insurance plans offer more than an annual wellness check.
Non Profits
Medical aid schemes are non profit organisations (although, as a loophole, the administrators that manage them can do so for a profit).
Insurers, on the other hand, are always a for-profit business. That means their incentives are somewhat differently aligned.
