It’s the end of the year, and you’re probably reviewing your insurance products and cover. With most South Africans feeling a bit cash-strapped, you may feel yourself looking at cheaper options to save some money. But will cheaper cover your needs?
Let’s look at Medical Aid versus Medical Insurance
First off, it’s worth noting that Medical Aid and Medical Insurance are two different products. In general, Medical Aid is more expensive than Medical Insurance. However, there’s more to these products than just the price point. Let’s dig into the detail.
Medical Aid
Your Medical Aid needs to comply with the Medical Schemes Act and provide cover in accordance with the Act.
Medical Aid provides cover for prescribed minimum benefits.
Medical Aid provides cover for your day-to-day medical expenses such as doctors’ visits and medication; certain plans may come with a medical savings account for these claims.
Payments are made to doctors, hospitals or pharmacies directly from the scheme (or if you pay upfront, you need to claim back from your scheme).
Medical Aid usually has different cover options, depending on you and your family’s needs, which range from Hospital Plans to Comprehensive cover.
Medical Insurance
Medical Insurance can be taken out as a stand-alone product, or even for gap cover – when your Medical Aid savings account/day-to-day benefit has run out.
Medical Insurance pays you, not the provider – this means you will need to settle your own accounts, with any shortfalls coming out of your pocket.
Medical Insurance pays out set amounts selected when taking out the cover (for example per hospital visit or procedure).
Medical Insurance usually offers limited cover for day-to-day medical expenses such as doctors’ visits and medication.
Medical Insurance does not have cover for prescribed minimum benefits as laid out by the Medical Schemes Act.
You will see that there are a few key differences to these products and comparing them directly is a bit like comparing apples and oranges. Both provide cover for when you’re ill, but there are different levels and forms of cover.
So, which cover is right for me?
If you’re still young and healthy and thus unlikely to incur a lot of medical costs, Medical Insurance may be an option. But if you’re older, or have a family, or you’re on chronic medication, Medical Aid may be a more appropriate fit. You may even be better suited for a Hospital Plan only, instead of Comprehensive cover based on your needs and medical expenses.
Some food for thought
Medical Insurance may look more affordable based on premiums alone, but also look at what is covered and whether you’ll be able to afford the out-of-pocket expenses. While Medical Aid may seem more expensive, you will find that you may save a bit more because there are fewer out-of-pocket expenses thanks to a savings account/day-to-day benefits.
To make the best decision for your cover, work out your needs and discuss changes like these with your Financial Advisor who can help you make an informed decision about your health cover.
For more information about prescribed minimum benefits and which conditions fall under these, you can visit the Council for Medical Schemes’ website.
