Medical cover for 2024
Medical schemes are under enormous cost pressure, which is why they have been unable to comply with the Council for Medical Schemes’ suggestion to limit their annual contribution increases to 5%, says Jeremy Yatt, Principal Officer of Fedhealth Medical Scheme.
In addition to the rising cost of health care, which schemes need to factor into their annual increases, most schemes are not growing their membership base with younger, healthier members. An older membership base typically has higher claims, costing the scheme more.
Yatt says that one of the biggest misperceptions is around how the medical savings component of a medical scheme membership works. “Most schemes allocate a proportion of the monthly contribution to a member’s medical savings account, typically around 25%, which can be used to pay for medication, GP visits or other day-to-day health care needs. Members can use their entire medical savings allocation for the year in the first six months, in which case the scheme is essentially loaning them the money in advance. When people say they have run out of medical aid, that’s not exactly true: they are still covered for the big ticket items such as a hospital admission, but they have run out of their medical savings component of their plan.”
Fedhealth operates a little differently: rather than offering a medical savings benefit, the scheme’s MediVault and Wallet benefit allows members to choose how their medical savings are structured. A flexible repayment option means members only start paying for their day-to-day benefits when they intend to use them. Members who select the flexible option transfer funds from their MediVault to their Wallet when they need to pay for day-to-day expenses, with the funds repaid interest-free over 12 months.
Members who choose the fixed option have a predetermined amount transferred to their Wallet on 1 January each year. This amount is pro-rated for those who join after 1 January. Members know upfront how much day-to-day funds they have available for the year and start to repay that amount every month from the beginning of the year.
Both options allow members to transfer additional funds if they should need it.
“Medical savings have now become an accepted part of a medical scheme plan. The challenge with a conventional medical scheme is that most people either have too much medical savings or too little, as most plans are rigid in this regard. We’ve tried to circumvent that rigidity by providing more flexibility so members can decide what works best for them,” says Yatt, adding that this flexibility is ideally suited to younger, healthier members as it allows them to choose a more affordable plan.
Fedhealth is the only scheme which allows members to upgrade their plan during the year, typically within 30 days of a life-changing event such as a pregnancy or being diagnosed with a disease. “This means members don’t have to pay for a more expensive plan just in case,” says Yatt.
He adds that it is possible to keep your medical scheme membership affordable if you pay attention to how it works.
Fedhealth was the first scheme to raise the child-dependant age to 27, although other schemes have since followed suit and increased the child-dependant age.
Yatt advises prospective medical scheme members to read the fine print and carefully examine each scheme’s benefit options. “Don’t choose your medical scheme based on their lifestyle programme but rather on what benefits it offers.”
His advice to younger people is not to fall into the trap of thinking they don’t need to be covered by a medical scheme. “Without the benefit of medical scheme membership, you risk having to self-fund expensive health care treatments should you be diagnosed with a serious illness like cancer. This can quickly decimate your savings. Instead, be clever about it, factoring in that more affordably priced plans will have limitations in what they cover. Take away that shortfall with complementary products like gap cover,” he concludes.
By: Jeremy Yatt, Principal Officer of Fedhealth Medical Scheme.