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SA's No 1 Insurance Blog

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 anaesthetist 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.

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