Image: Marcelo Leal / Unsplash 
Did you know that in South Africa, there are currently 16 open medical schemes available? This high number of competitors in the medical aid space may seem like a good thing for the average South African consumer. After all, the more competitors, the better the offering – right? Unfortunately, the very nature of how medical aid is structured in South Africa presents some major problems when it comes to flexibility and affordability, no matter what scheme you choose to go with. So, what are these problems, and what are the potential solutions?
Problem #1: Hospital plans aren’t backed up with day-to-day savings
Your day-to-day savings is the set amount of money your medical aid plan gives you access to each year to pay for medical expenses such as glasses, medication or GP visits. Many hospital plans offer minimal or no day-to-day savings – which is great if you don’t have a lot of health issues. But things can change, and if you find yourself suddenly facing more medical expenses, you may want to upgrade to a more comprehensive plan with day-to-day savings. The problem is, you’ll usually have to wait until the following year to do so. In the meantime, you’ll have to pay for all your extra medical expenses out of your own pocket.
Problem # 2: Day-to-Day savings are too rigid
Day-to-day savings vary depending on the provider, but they usually amount to around 25% of your monthly medical contribution. But here’s the problem: people have very little say in how their day-to-day savings are structured and how they pay for them. If the amount is too little to cover certain medical expenses you’re facing in a given year, you’ll need to pay the rest out of your own pocket. And if you don’t use all your savings in a given year, then you’re still paying for this facility via your monthly contribution.
Problem # 3: Network hospital options are limited
Many of the more cost effective medical aid plans are network-only options, which means you’re restricted to only using certain hospitals that are contracted to the medical scheme you belong to. Typically, you can also only use these hospitals for planned procedures and not accidents or emergencies. While being restricted to certain hospitals may sound fair in return for a lower medical aid contribution each month, what isn’t fair is that most medical aid schemes also cut the quality of your benefits on these plans – or slash them entirely. But if you’re already saving the scheme money by being restricted to using only network hospitals, is it fair to cut your benefits too?
Problem #4: Pay the same – but don’t claim the same
Risk cover is the core medical cover you get that’s funded by pooling together all member contributions from the scheme. When a member claims for a hospital admission or risk event, the claim is then paid from those pooled funds. But if you don’t claim often, why does your medical aid cost the same as an elderly member who may need expensive hospital procedures such as hip and knee replacements? Logically, shouldn’t you be paying less if you’re claiming less? Unfortunately, this isn’t the case – you all pay exactly the same each month.
So what’s the solution? What’s needed is a complete rethink of how medical aid is structured in South Africa. Luckily one medical aid provider, Fedhealth, is doing just that.
As a start, if you’re on a hospital plan you can activate your back-up savings at any time and convert to being on a flexible Savings Plan. You can also upgrade anytime of the year to a higher option should you need to. Then, Fedhealth’s “Elect” options give you the same benefits as the main variant, but you pay 25% less for your monthly contribution. In return, you pay a fixed excess amount for every procedure – like the excess on your car insurance. If you don’t foresee needing a planned procedure anytime soon, you get to pay less for your contributions each month.
When it comes to network hospitals, Fedhealth’s “GRID” options cost 11% less than the non-network equivalent, but there’s no difference in the quality of benefits offered. And finally, Fedhealth gives its members total control over their day-to-day savings, where they only pay for them once they start using them.
The common problem with most South African medical aids is a distinct lack of customisation. While most schemes claim that they are customised, this is not really the case. Luckily, Fedhealth is creating innovative solutions that really are personalised to your specific health needs. The end result? You get real value out of your medical aid – and you can control your medical expenses by not paying for what you don’t need. With South African consumers feeling the pinch, this is a much needed change in the medical aid space. DM