It’s that time of the year again.
What am I on about?
It’s that time of the year where you get to choose next year’s medical aid plan. Some of us will be downgrading, while for others, an upgrade is on the cards.
And if you’re unhappy with your current medical aid, and you don’t belong to a group scheme, a change of schemes is on the cards – but be careful when doing that because waiting periods can apply. I’d suggest speaking to a healthcare broker first.
And now for my disclaimer.
In the past I’ve written a number of articles on various medical schemes. There’s been Genesis Medical Scheme who has a great offering. Then there’s Fedhealth Medical Aid about whom I’ve recently written. And finally there’s Discovery Health Medical Aid – my home turf.
Discovery Health is the only company which I market. So anything I say about them in the upcoming articles must be seen from this perspective. After all there is the possibility that I will portray them in a better light in order to garner your business.
Let me also add that I’m a Discovery Health customer which mustn’t be seen as an endorsement either. I’m familiar with their plans and so it makes sense for me to be with them. Furthermore, I’ve never had problems as a client of Discovery Health.
How has Discovery Health performed over the past year?
Well they’re certainly the biggest open medical scheme. Open meaning anyone can join the scheme versus restricted which means that only a certain group of people can join. According to Discovery Health, they have 54% of the market which translates into 2.7 million lives covered.
The average age of their members is 33.9 which is great. Theoretically, the younger the membership, the healthier the individual, the less they cost the scheme.
Then there’s solvency ratios. Medical schemes are required by law to maintain a solvency ratio of 25%.
Discovery Health’s solvency ratio is standing at 25.98%. Once a scheme dips below the 25% mark it has to make up the shortfall in the next year, and there’s only two ways to do that as far as I know:
- Pay less out in claims, i.e. lower the benefits, or
- Charge more
One of the biggest risks you and I face is that of our scheme going belly up. Discovery Health say they have R12.9 billion in reserves and that their credit rating is AA+.
Now none of this is really important to you and I. I for one am more interested in knowing how my benefits compare to those on other schemes. Discovery Health states that they offer higher levels of cover than the next 9 largest open schemes (That’s according to the GCR South Africa medical schemes statistical bulletin, Sept 2015). To put that in perspective, that sort of difference would pay an additional R1.1 billion in claims at Discovery Health.
But who are they fooling, right? They’re obviously getting this right by also being the most expensive scheme.
Not so apparently. Discovery Health analysed the available marketing material from other schemes, and concluded that on average they are nearly 15% more affordable per plan in comparison to the next 9 largest open schemes.
This of course, is all history. You and I are more concerned about next year, and there’s a few nasty surprises ahead for some of us at Discovery Health which I’ll discuss in later posts.
So here then is Discovery Health in a nutshell
Medical aid schemes consist of three major types:
- Traditional schemes
- New generation schemes, and
- Hospital plans
Now I’m not going to get into a discussion on which is best suffice to say that Discovery Health is not a traditional scheme.
New generation schemes separate your day to day costs from your major hospital expenses. Basically, you get an allowance upfront for the year (known as your medical savings account), and this is then used to pay for expenses which are deemed to be under your control. Depending on the plan you choose, once (or should that be if?) your medical savings account runs dry, you either have:
- A gap during which you must pay your own expenses (Known as a self-payment gap), or
- You must pay all further expenses out of your own pocket
So quite simply, if the plan you choose at Discovery Health contains any of these words:
- Priority, or
Then it’s a new generation plan with a savings element. If your plan contains the word “core”, then it’s a hospital plan.
And just to throw a spanner in the works, Discovery Health now offers a product called “Smart Plan” which is a hybrid option.
On the other end of the scale is their KeyCare range aimed at the person wanting something basic where they don’t need to worry about things like medical savings accounts.
So what I like to do is split their range in two:
- Anything with the words, Executive, Comprehensive, Priority, Saver, Smart, and Core on one side, and
- Anything with the word KeyCare on the other.
Got it? We’ll look at KeyCare in a later post.
Let’s now take a look at the Discovery Health new generation plan ranges
Here’s how the plan ranges stack up from best to worst, or if you prefer, most expensive to least expensive (or from the ‘very sickly’ to the ‘very healthy’):
- Smart, and
The first three plan ranges – Executive, Comprehensive, and Priority – all offer an ‘above threshold benefit’ which means Discovery Health picks up the tab once you’ve jumped the self-payment gap.
The Saver plan range has no such benefit, and once you’re out of medical savings, you’re out.
The Smart Plan range is a hybrid in that it’s something of a hospital plan, and something of a ‘pay as you go’ plan if you wish to see a doctor.
The Core plan ranges are for hospital cover only.
Plans within plan ranges
You’ll notice I spoke about ‘plan ranges’ above. That’s because on certain of the plan ranges, there are a number of options from which to choose.
These options are:
- Classic Delta
- Essential Delta, and
Once again these work downwards from most comprehensive to least comprehensive (or more expensive to least expensive).
What’s the difference between Classic and Essential?
It all boils down to the Discovery Health Rate. If you’re on a different medical scheme then rest assured, they have something similar.
Maybe you’ve read somewhere that in the event of you ending up in hospital, you’re covered for 100% of the hospital bill. Now I won’t blame you if you understand this to mean that 100% of our hospital bill will be paid in full. The truth is that this is not a correct interpretation.
In practice, what happens is that each scheme determines their own rate for a procedure. Take a tonsillectomy for instance: Discovery Health might conclude that the cost for such a procedure is R10, 000. This then becomes known as the Discovery Health Rate. If you’re with another company, and they pay R15, 000 for the same procedure, this would become your scheme health rate.
In our example, 100% of the Discovery Health Rate is then R10, 000 for a tonsillectomy. In reality, the procedure could end up costing R15, 000 which is why some plans offer 200% of the Discovery Health Rate. In other words, up to R20, 000 cover (R10, 000 x 200% = R20, 000).
At Discovery Health, the following terms reflect the various levels of cover:
- Executive – 300% of the Discovery Health Rate
- Classic – 200% of the Discovery Health Rate, and
- Essential – 100% of the Discovery Health Rate
So if you can afford it, Executive is better than Classic which in turn is better than Essential.
To ‘Delta’ or not to ‘Delta’?
Delta simply refers to a networked hospital option. Discovery Health has negotiated a cheaper rate with certain hospitals, and then in return passes this discount on to you, the patient.
You the member, elect to make use of these networked hospitals for any elected surgery, and the hospital in question anticipates an increase in business.
Failure to use these Delta hospitals results in a hefty R7, 100 co-payment during 2017 (and taking out gap cover for this won’t help either).
So what’s important when considering the Delta option?
Consider the family having a baby.
Their doctor refers them to a gynaecologist. The question then arises, “Does this gynaecologist operate out of one of the Delta networked hospitals?”
If not, they’re going to have to either:
- Find a different gynaecologist, or
- Pay the R7, 100 co-payment for a hospital of their choice
It also doesn’t help choosing a Delta hospital if one isn’t conveniently located for you.
Another question which always comes up is: “What happens in an emergency?” The co-payment only applies when it comes to authorised procedures. It does not apply in emergencies.
Is there any benefit to using a Coastal plan?
Four of our provinces fall into this category:
- Eastern Cape
- Western Cape
- Northern Cape
For those living in Gauteng, this ain’t an option.
Coastal plans offer 100% of the Discovery Health Rate but you must use one of the selected coastal hospitals for your procedure. Using any other coastal hospital will result in them not paying the bill (This is according to their brochure).
And what if you decide to use a hospital in say, Gauteng? They’ll only pay 70% of your hospital bill.
Coastal Saver is:
- cheaper than Essential Saver but
- more expensive than Essential Delta Saver.
- However, it offers a much larger medical savings account than the other two plans.
Coastal Core is:
- cheaper than Essential Core while
- more expensive than Essential Core.
- The Essential Delta Core option allows the use of 11 hospitals compared to the undisclosed number of hospitals on Coastal Core. Admittedly, their list of hospitals brochure does say ‘any’ private hospital but it also says that the list can change at any time. It’s a bit of a grey area in my opinion.
In the next article we’ll look at KeyCare before moving into more detail on the individual plan types.
As usual, feel free to leave your comments below.
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The InsuranceFundi Team