When it comes to health cover, most South Africans want medical aid even if it is just a basic hospital plan medical aid. Unfortunately not all South Africans can afford medical aid. Less than 20% of South Africans are on medical aid cover. The annual rise in contributions mean that many medical scheme members are hard pressed to afford the cover. Alternative medical cover option like the health insurance cash policies and medical insurance have made their way into the market. However, it is important to understand the differences.
If you are deciding between medical aid and health insurance then you need to be aware of the differences between these plans. Health insurance is not medical aid in any form. It has several benefits that are unique and helpful to consumers. You will get cash in your hand for being in hospital. Medical aid does not provide this type of benefit to members. On the other hand, medical aid cover pays for the exorbitant cost of private healthcare. With health insurance the payouts often do not meet this level of financial protection.
Health Insurance vs Medical Aid
A health insurance plan in South Africa is a re-worked version of the hospital cash back plan. This type of plan is an insurance policy and was marketed aggressively in South African media in the past. However, it is the cause of much confusion among consumers as it is often mistaken for a medical aid hospital plan. This is a common misunderstanding about hospital cash plans. Health insurance (aka hospital cash back plan) and medical aid hospital plan are two different products.
The hospital cash back cover is not new. It even precedes medical aids. However, it often took a back seat to medical aid products until a few South African insurance companies revived the product in the market. A hospital cash back plan pays you for each day that you are in hospital. This type of hospital cover is financial protection when you are incapacitated in the hospital environment. The payout is intended to be used for personal or medical expenses.
How is health insurance different from medical aid?
Medical aid is also a type of financial cover that pays for healthcare procedures. It pays for all legitimate and essential services like a doctor’s consultation, blood tests or surgery. Most medical schemes offer a variety of plans for different budgets. A medical aid hospital plan only provides cover for healthcare expenses when you are hospitalised. It includes a chronic benefit. However, a medical aid hospital plan does not pay you a specific cash amount to the member of service provider.
Medical aid hospital plans cover treatment according to specific tariffs for approved procedures. This may be paid directly to the service provider (like the private hospital or doctor) or to you as the member after the treatment is done. Out-of-hospital or day-to-day medical services are not covered with a hospital plan medical aid. You will have to pay cash to the doctor, specialist, pharmacist, laboratory or other healthcare professional for out-of-hospital treatment.
The Price Factor
As with any type of cover, price is a factor. Medical aid is the most expensive form of healthcare cover when compared to health insurance (hospital cash back plans) or medical insurance. There is a reason for this – these are different products with different levels of cover. Health insurance and medical insurance are not just cheap forms of medical aid. These products are not medical aid. However, they are still useful and applicable for a sector of the South African population that cannot afford medical aid.
Health insurance starts from R240 per month and can pay out as much as R3,000 per day in hospital. Medical aid on the other hand starts from R1,100 per month. These rates are for a single member and does not include other family members (dependants) on the cover. There are low income medical aid options if you earn under a certain threshold. However, these plans are also relatively expensive when compared to the earning of people who qualify for this cover
Benefits of Health Insurance
Health insurance may appear similar to a medical aid hospital plan at face value. Many consumers are disappointed to later discover that a private hospital will not accept a health insurance plan in the same way as medical aid. However, this does not mean that it does not have a place in the South African private healthcare market. There are several distinct benefits of health insurance.
Cash for Being in Hospital
A health insurance (hospital cash back plan) pays the beneficiary for each day that you are in hospital. This can be as much as R3,000 per day. Many health insurers are now offering lump sum payouts for specific conditions. The payout is made directly to the beneficiary, and not to the doctor or hospital. It allows you to use the money as you see fit, whether it is to cover personal expenses or pay for your medical bills.
Financial Protection
Being in hospital may incur unforeseen costs beyond the medical bills. Self employed individuals for example may not be able to earn an income when in hospital. A health insurance plan can therefore protect against the financial loss from being hospitalised, particularly if you do not have income protection cover.. However, it can also be used to fund shortfalls in medical aid cover. In other words, if a medical aid does not pay the doctor’s bill in full then a health insurance payout may assist.
Health Insurance Benefits for Pregnancy
Most health insurance plans do include maternity benefits. However, it is important to understand the payouts in these instances as it may be limited. The maternity benefits on the insurance plans will not cover the cost of childbirth in the same way as a medical aid covers pregnant women. The payout will not be able to fund childbirth delivery in a private hospital, which is often over R30,000 for a caesarean section (C-section).
Instead the health insurance plan provides a cash payout to the mother to cater for other expenses. This cash payout can be used in part to cover hospitalisation and childbirth in a private hospital. Many obstetricians charge higher than medical aid rates and the health insurance payout can help cover the shortfall, if a patient does not have medical gap cover. It is also useful to cover the host of expenses that arises with having a baby.
Which Cover is Better?
This is a common question that may consumers ask when deciding between medical aid or a health insurance. It is not practical to compare these two products. Medical aid is intended to financially protect a member against the high cost of private healthcare in South Africa. Health insurance financially protects a member against the personal cost of being hospitalised. Ideally you should have both types of cover – medical aid and health insurance cover.
A medical aid will pay your doctor, the hospital and related medical bills. It may not cover these bills in full and gap cover will then pay for the shortfall. The health insurance plan pays you cash for being in hospital which you can then use to offset the shortfall in medical bills. Alternatively you use the cash as you want. This is not to say that health insurance is an alternative to or can replace medical gap cover. Once again these are different financial products.
You need to understand the way health insurance works and covers conditions compared to medical aid. Medical schemes in South Africa are governed by the Medical Schemes Act No. 131 of 1998 and regulated by the Council of Medical Schemes. Health insurance does not fall within the ambit of the Council. Instead health insurance complaints should be directed at the insurance ombudsman. It is important to first try to resolve the issue with the insurer prior to lodging a complaint with the ombudsman.
Always make your choice carefully when choosing the best cover for your needs. Your budget is always a factor but do not expect the same level as cover when choosing between two different plans. Health insurance is not cheap medical aid cover. It is not medical aid in any form. Nevertheless, health insurance plans are helpful and can provide South Africans with the financial protection they need when they are incapacitated in hospital.