To answer this question, it is necessary to understand what a medical scheme is and how to access the right cover you need. The biggest challenge, and often how decisions are made, is how much membership of a medical scheme costs for you and your dependents.
WHAT IS A MEDICAL SCHEME?
A medical scheme operates as a non-profit organisation and could be viewed as a trust fund whose only beneficiaries are the members of that medical scheme. The income of that medical scheme comes from the members’ monthly contributions and investment income on the reserves of that medical scheme as determined in the Medical Schemes Act. The medical schemes are “owned” by its members which means that it does not have outside shareholders and does not pay dividends or distribute its profits to anyone. The expenses paid by medical schemes every year are for claims from members for the cost of medical services they received such as doctor consultations, hospitalisations or investigations like pathology tests or x-rays which represents ±85% of the expenditure every year. The cost of managing the medical scheme accounts for ±15% of expenses paid.
To put it in perspective, a medical scheme can be seen as a community of people of different ages, different health needs and different disease profiles. Therefore, in such a community different individuals have different healthcare needs.
PRINCIPLES OF A MEDICAL SCHEME
The Medical Schemes Act makes provision for inter alia the following broad principles that you must understand if you are a member of a medical scheme:
Open enrolment – This means that any medical scheme must admit all persons who apply to be a member and cannot deny membership based on a prospective member’s age, health status or how much that person previously spent on healthcare.
Community rating – This means that all members within the same option of a medical scheme will pay the same contribution, irrespective of their age or their health status.
Cross-subsidisation – The principle of community rating supports the principle of cross-subsidisation. According to this principle, the monthly contribution fee of the more healthy and younger members within a scheme population who claim less will be used to cross-subsidise the monthly contribution of sicker and older, higher claiming members.
WHAT TYPES OF MEDICAL SCHEME OPTIONS?
Practically, every option within a medical scheme represents a unique product with a specific range of benefits that you can choose from. Every option will have a set of benefits and a contribution rate that will be determined by how comprehensive the benefits are. To make it easier to understand, think of three medical scheme options:
- A more traditional option provides comprehensive cover that will include benefits for your family doctors, dentist, optometrist, hospital, and specialist
- A hospital plan that will provide benefits when you are admitted to the hospital;
- A saving account that pays for your day-to-day health needs may be added to the hospital plan and remains your savings if not used.
WHAT IS YOUR ENTITLEMENT TO BENEFITS?
Your entitlement to benefits is determined by a few important factors including the type of option within the medical scheme you elected to be a member of the list of benefits of those specific options as well as the rules of the medical scheme.
What is generally not known is that every medical scheme must in its rules provide for what is called the Prescribed Minimum Benefits (PMB). PMB refer to the minimum set of benefits you and your family are entitled to irrespective of the medical scheme option you chose. Whether just a hospital plan or a more comprehensive option. PMB provides for the diagnosis, the treatment and care costs, without co-payments, for a list of 27 chronic conditions, the Chronic Diseases List, a further list of ±270 medical conditions as well as emergency medical conditions. The PMB is a safety net that ensures that members are not without care for certain important medical conditions because they cannot afford it or their benefits have been exhausted. As an example, if you only have a Hospital Plan option you are entitled to benefits out-of-hospital that will cover the cost of consultations and treatment by your family doctor and referral to a specialist, for blood tests and ECGs and medicines for conditions like high blood pressure, diabetes mellitus, high cholesterol, angina, asthma, epilepsy and many more. Your medical scheme may however impose certain rules to manage these benefits. Please inform yourself about your entitlement to PMB.
YOUR HEALTHCARE NEEDS
So back to the original question. It is crucial that you choose the option that is best aligned with the health needs of yourself and your family. Of importance is to consider that as you get older, your health needs may change. For a young family with children, an option with cover for the needs of growing children may look very different from that of an older couple in need of much more comprehensive cover for the ravages of chronic diseases, cancer and diseases of wear and tear. This is where benefits for hip and knee replacements and benefits that cover care at home if you or your partner becomes weak and need assistance to cope with your illness and life in general, become a reality. Because of the principles of medical schemes, the benefits of an option are similar for the young and the old. The benefits of an option will stay the same. It may therefore be necessary to critically investigate which benefits are available in an option that makes provision for the healthcare needs of yourself and your loved ones. Remember, you may change your benefit once a year, usually at the end of a benefit year so as to make provision for changing healthcare needs.
Last advice – critically read the rules of your medical scheme and benefits of the options that you elected and know exactly which cover you are entitled to.
Dr Martin de Villiers is the Medical Director at Medwell SA.
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