HOW TO CHOOSE A MEDICAL AID

Introduction

Who’s getting the biggest chunk of your paycheque every month?

Is it your bond? Maybe your car repayment? School fees?

Now the great thing about all of these is that you’re getting something for your money. Eventually that home will be yours – that car yours – but spare a moment for those expenses where you seldom get anything back.
Think along the lines of car insurance? Or what about medical aid?

Wouldn’t it be nice if you could save on medical aid?
Every now and again I meet people on the wrong medical aid plan for their needs. Think about this a moment; how much thought have you given to choosing your medical aid compared to buying the car you drive?

If you’re like me then you started with the cars you liked but couldn’t afford. Then you started rationalising things: “Okay, I can buy a 4 year old Mercedes or a brand new Hyundai…” Then you took a few cars for a spin, and let’s be honest, even a few which were completely out of your price range.
And eventually you end up buying a car you couldn’t afford anyway, right? Right now I’m dealing with a lady where the ‘run-flat’ tyres cost R3, 000 a piece. She’s already replaced two because of potholes in the year she’s owned it.

Much of this applies to your choice of medical aid plan. Today I’m going to show you some great pointers on how to choose a medical aid plan which is just right for you. And it isn’t going to take half as long as the decision to buy a new car. Let’s start with…

How much can you afford to spend?

Who doesn’t want the Rolls Royce of medical aids?
We all want to know that if we see a dentist, it’s paid. If we need an operation, that we’re booked into a private ward in the best hospital in South Africa – and it’s paid. But are we willing to spend R10, 000 a month for the privilege?

Knowing how much you can spend eliminates most of the wishful thinking.

What do you need?

Without knowing what you need how will you ever know which plan to choose? So grab a pen and paper and make some notes.

  • How much have you spent on day-to-day healthcare expenses over the past twelve months?
  • How were those expenses broken down? GP visits – R3, 000? Hospitalisation – R0? Dentistry – R5, 000? Medication – R2, 000? If you already belong to a medical aid scheme, it’s even easier. Just ask them to send you a copy of your claims history for the last twelve months.
  • Which of those expenses where once offs which won’t come up again soon (like childbirth) and which are likely to come up again and again (Like the flu)? Twice a year you should see the oral hygienist so it needs to be included in the budget, right?

If you find that you seldom use the medical aid and are unlikely to claim unless you need a serious operation, then all you need is a simple hospital plan. If you run out of savings by March, then you need a plan with more savings or an above threshold benefit.

A 20 year old who hasn’t seen a doctor since the day his mother gave birth to him needs something quite different from the 50 year old with high blood pressure and diabetes.

Okay, now we know how much you can afford. We also know how much you spent on medical expenses last year and how much you expect to spend going forward.

Now it’s time to look at different medical aid plan options.

This is the third step and it’s here that you need to tread lightly. You need to understand that medical aid plans are made up of three components:

  • Medical expenses covered while in-hospital (you need to be admitted to hospital for these to get paid),
  • Expenses covered while out-of-hospital (day-to-day expenses such as dentist visits), and
  • Chronic illness benefits

The major risk is being involved in a medical emergency and not having the money to pay for a private hospital. Hospitals are businesses, and if you rock up at a private hospital you need to whip out either your medical aid card…or your platinum credit card…or both.
This is what the majority of your medical aid premium is used for. A smaller portion of your premium – either 25% or 15% of the total premium – is used to fund your out-of-hospital expenses. You know? The dentist bills, the doctor visits.

But what’s covered differs from one plan to the next, so tread carefully

Cheaper plans usually offer a different medical aid tariff rate to the more expensive plans. The tariff rate – or health rate – is simply what your medical aid scheme will pay for a procedure while in hospital. Some plans might offer 100% of tariff rate while other plans cover you at 300% of tariff rates.

Here’s what I mean by that…

  • Say you need an appendix operation and your surgeon and anesthetist charge R10, 000 for their combined services.
  • But your medical scheme has set the tariff rate for the procedure at R5, 000.
  • If you’re on a plan which is only offering 100% of the medical tariff rate, then your medical aid will only pay R5, 000 for the procedure.
  • The balance of R5, 000 is from your own pocket.
  • In this instance, a plan offering 200% of the tariff rate would have worked wonders

What’s really scary is that it’s almost impossible to compare two different medical aid schemes.

Let’s say Company A costs R2, 000 a month for a plan offering 100% of the Company A tariff rate. Company B offers a similar plan at 100% of the Company B tariff rate but at a lower cost of R1, 800 a month. You and I would assume that Company B is the better option since it is the cheaper option. But this would not be if the company B tariff was half that offered by Company A.

Let’s take the example mentioned above. Say for example, Company A paid R5, 000 for the appendectomy and Company B R2, 500. The saving of R200 a month in premiums is now trivial when compared to what you now have to pay in:

  • With Company A you pay in R5, 000
  • With Company B you pay in R7, 500

In the next post we will take a look at choosing a medical scheme by identifying whether your medical scheme is under financial threat.In other words, in this article we looked at the plans being offered to you right now. In the next article we look at how stable the actual medical scheme is.

In the meantime please leave a comment below telling us where your medical aid cost falls into the grander scheme of your monthly budget.

Are you in the market for a medical aid quote?

Why not leave your details below and we will get back to you with a few medical aid partner options via email.

Until next time.

The InsuranceFundi Team

(Visited 2,450 times, 1 visits today)

We support vigorous commenting on our site. Please feel free to leave your questions and concerns.

We are not a platform to voice displeasure with a particular company. There are plenty of sites for that, not to mention using the actual product providers website or Facebook page.

We ask that you keep your commenting on topic and respectful. Comments that do not meet this standard will not be published.

Would you like to leave a comment?

12 thoughts on “HOW TO CHOOSE A MEDICAL AID

  1. Thanks Man your articles Really helped me a LOT , I have a Dilemma that I hope maybe u can clarify
    This year i visited a Specialist and which of course on a some few test, and xrays “The Shark” wiped out my MSA and i dont have the threshold benefit, now i am sitting with the decision of why am i still with the provider while i don't have a single cent on my day-to-day benefit.

    What would be the implication Should i decide to jump ship

  2. Hi Stanford. Thanks for your email. I am glad you are enjoying the articles. Yip specialists can wipe your MSA account out if you aren’t careful. Actually nowadays even your medical bills for in hospital procedures are coming back unpaid. Check out my new article on medical aid top up cover (home page of the blog). The problem you are going to have if you jump ship and move to another medical aid is that you are still going to owe your current medical aid some money. Why you ask? Well it's because the monies in the MSA account is loaned to you upfront for the year provided that you pay all 12 premiums in the year. If you use up all the MSA by mid-year and decide to bail you have effectively used up the loaned money but haven’t yet paid it back with your premiums. Sit tight for the remainder of the year and re-look your options again for next year. Without the threshold benefit you are going to need to pay for the day-to-day expenses your MSA would have covered out of your own pocket.

    I look forward to your response.

    Brendan

  3. Yeah Brendan i guess i am screwed here i just have to stick it out for the rest of they year i guess, which brings me to my next point about Specialist and how they operate , is there any regulations on this Medical field since i feel most citizens are getting ripped off here, let me give u an example on my scenario.

    1 – I have chest pains and breath problems,then i visit the Specialist, he performs his normal checkup and finds nothing R900 deducted from my MSA
    2 – He sends me to the lab down the corridor for blood tests R700 deducted from MSA
    3 – Instruct me to come back for the results R560 deducted from my MSA just for the appointment to check the test results
    4 – Results shows nothing , i am sent for XRays to a Lab 2Floors Below and still nothing is shown R600 deducted for the xRays , then Sent for Chest Scans R4600 deducted from my MSA
    5 -Appointment for Chest Results R590 deducted as well
    Total Amount = +- R8000, then i ask my self he does not have blood test facility, XRays and Scans, then why are we paying so much for basically nothing is there any regulators for Medical Specialist or this is just standard practice and how does one avoid this kind of bills since i was'nt told that i would be charged Separate for all this

  4. So help me out please Brendan. I am about to retire, I am currently am on a classic comprehensive plan courtesy of the company I work for. Current contribution (R4500) will exceed my budget. I need to have peace of mind but at the same time the product needs to be affordable. What are your thoughts on “top up insurance” in tandem with a hospital plan. Our budget is around R2000 per month (2 of us)

  5. Hi Tim,

    Thanks for your comments. Nothing wrong with a comprehensive medical aid
    plan with top up cover provided that you are able to self fund all your
    day-to-day expenses out of your own pocket. Remember that the top up
    coverage is limited to in-hospital procedures.

    Brendan

  6. Hi Tim.

    Look at the core range on the Discovery Health platform (hospital only coverage ) and then add the top up cover. Only thing is that you will need to pick up all your out of hospital expenses. Keep reading our blog posts and thanks for your comment

    Brendan

  7. The biggest expenses for by far the greatest number of people are as follows:
    1) Taxes -Direct +- 30% – Vat 14% Fuel,Road,Toll,School fees and all the other charges that Government levies at departmental level ( a friend was recently aksed to pay for his finger prints at a Police station) Cipro if you have a company. All the Government depart ments are now revenue offices so make sure you understand what you are paying twice for.
    2) Interest- which in most civilised countries is <5% and is tax deductable-not in SA!!!
    3) Private school fees -these are being paid on top of the taxation you are charged for education (which is the 2nd to 3rd largest government budget). You send your children to private schools because of the appalling standards and conditions prevailing in government institutions. Once again you are paying twice. In most civilsed countries tertiary education is covered by government and or private grant. In SA you pay!
    4) Medical which once again you are paying twice for -i.e.via taxes (the benfit of which you dont get and perhaps you dont want).

    So before you do any dumb budget calcs be aware of what your real budget is or if you are one of those gingoistic South Africans who see nothing wrong with the above and are blind to everything that is abhorrent in Africa then carry on an support a corrupt and evil system!

  8. Thank you for your comment…

    You make a valid argument and no doubt express the sentiments of many a
    South African taxpayer.
    Unfortunately at this stage in time there isn't much you or I can do about
    the unjustness of the system so I'll leave that debate for more learned
    scholars.
    What it does mean is that you need to make sure you have access to the best
    healthcare possible. The only way to do that is by having a suitable medical
    aid plan in place…or to emigrate (which isn't always an option)!

    Lawrence

  9. Hospital plans are designed to take care of you when you are admitted into a hospital and need medical attention. However a hospital plan will not pay for your medical needs, instead it pays you for everyday you spend in hospital. The company you purchase the cover from will pay you a selected amount in to your personal banking account for every day spent hospital. This money may be used however you see fit. Be it to pay for the medical bills or even to make up for the lost income during the period you were admitted. The options are literally endless.

    • Yes hospital plans pay a rand amount for every day you are in hospital while medical aids that cover hospitalization cover all the costs associated with your stay in hospital

  10. Can I choose which benefits I require, I am a woman aged 49 and no longer require maternity benefits. Can I cancel this benefit and increase another benefit.

    • Hi Sandra,

      Thanks for your comment on our blog. Unfortunately you can’t mix and match
      the benefits on your medical aid plan. It’s a one size fits all model. The
      only area you have control is with your MSA (Medical Savings Account) – You
      get to control the spend..

      Look forward to hearing back from you again sometime

      Brendan