Are you feeling ripped off by your current medical aid scheme?
You’re paying an arm and a leg every month for the cover, and it seems as if you’re paying all your own expenses anyway!
You’ve investigated a few other schemes but don’t have a clue how to compare the benefits, and the last thing you want to do is call in an insurance broker
Question is…How do you go about deciding which medical aid scheme is right for you and your family?
According to the South African Financial Planning Handbook, there are four steps involved in choosing a scheme which is just right for you. Today we’re going to look at step one.
Make a list of medical schemes
- Scheme membership size
Quite simple really – the more people on the scheme the better! This way the scheme can bargain better prices with hospitals, pharmacies, and doctors. There is also more cash available for those times when everyone seems to be claiming… Think winter think flu!
Is the scheme gaining members, losing members or plain old stagnant? Look, getting old happens to the best of us. With age comes sickness. Sickness means increased expenses for the medical aid scheme. A scheme that’s not growing means that the existing members have to carry the increasing costs, which means higher premiums (and lower benefits) next year.
- Average age/pensioner ratio
Find out how many pensioners are on the scheme as well as the average age of members. If the ratio of pensioners compared to economically active members is high, then this spells problems. If the average age is quite young, then it’s good news. Now compare figures between schemes.
- Solvency ratio
By law, a medical scheme must have a solvency level equal to 25% of its gross contributions (from clients). If the levels drop below this, the scheme needs to increase its monthly contributions or decrease its benefits to come in line.
- Are they making a profit or loss?
If solvency levels are quite high, then a scheme can make its monthly contributions much lower because it knows it can dip into its reserves and still make money. If the solvency levels are quite low, then any losses this year will mean more expensive contributions next year.
- What have the schemes increases been percentagewise for this year?
By how much did the scheme increase its contributions this year over the previous year? If the increase has been much higher than average then it could indicate problems.
- Claims ratio and expenditure on non-healthcare costs
How much money is being spent on member claims? Now check how much money is being spent on non-healthcare costs (This can be found on the council for medical schemes annual report). Non-healthcare expenses should not exceed 10% of member’s contributions.
- Service levels
Ask them how quickly their claims were paid in the past year? Ask other members of the scheme about their experiences with their service? Ask your doctor what he thinks about the scheme and its paying of claims? Watch out if your doctor insists on you paying cash and then claiming it back from the medical aid in question.
Are you interested in getting a medical aid quote?
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Until next time.
The InsuranceFundi Team