Those of you who can afford it spend a serious whack of your salary on medical aid contributions each month. Do you have a choice? More like Hobson’s choice…It’s either belong to a medical scheme or nothing. Hold on, that isn’t entirely correct… you do have two alternatives. You could self-fund all your medical expenses or take your chances in a Government facility. What’s ironic is that while we shell out thousands of Rand each month on a medical aid, there is still a good chance that if you land up in hospital your medical aid isn’t going to pick up the bills in full! So why is that, and can you insure against the shortfall?
If you belong to a medical aid, hands up if you’ve experienced this: You’ve had a stint in hospital and while you are still recovering at home, with a warm bowl of chicken soup, the hospital accounts start arriving in the post (or perhaps in your email inbox).
The dreaded piece of correspondence you want to avoid is the one with the blood-red stamp on it, saying:
“Account not paid in full. The balance will be for the member’s account”
How is it that you can belong to a medical scheme, pay your contributions every month, and still find yourself in a position where you have to pay a portion of an unpaid bill?
It’s a valid question, and worth a dedicated blog post.
Right now, there’s a lot going on in the South African private healthcare space. Government is pushing ahead with NHI (National Health Insurance), and if you are employed, you will be forced to contribute to it. If you belong to a medical aid, there are talks off abolishing PMBs (Prescribed Minimum Benefits) and doing away with brokers who market these products.
In short, the private healthcare space in South Africa is largely unregulated, and current legislation is ineffective when it comes to trying to curtail provider costs.
What that means is that medical schemes are constantly battling to balance the scales. On the one hand, they can’t hike contributions up too much, otherwise they risk losing members, because they are overpriced. On the other hand, they have specialists and providers who charge what they like because they have businesses to run and, like any business, profit is the name of the game.
And it’s these exorbitant costs that medical schemes simply cannot afford to cover that creates the gap between what they feel is fair to pay and what they ultimately get billed by the doctors.
What options do you have as a medical scheme member?
- Only consult a Doctor who is contracted into medical aid rates
- Upgrade your medical aid plan
- Cover the gap with a Medical Gap Cover policy
Let’s look at the first option.
Many of the larger medical schemes in South Africa have a broad network programme in place. That means that Doctors and hospitals, in the network, have agreed to work within the scheme’s rates. If you use a provider in the network, you don’t run the risk of an “unpaid” bill landing up in your post box. That’s one advantage of belonging to a scheme that can use their size to influence better pricing for its members. Smaller schemes simply don’t have that type of leverage.
But this doesn’t completely solve the problem. What if you need to see a specialist who isn’t part of the scheme network?
Imagine you had a heart condition and only 5 specialists in the country could treat your condition. Do you think they are prepared to do the procedure at rates your medical aid has determined?
Not a chance.
It’s supply and demand, and if you have a special skill set, in a country where many skilled people are deciding to apply their trade overseas, you can basically charge what you like, right?
The best you can hope for is that your scheme has contracted enough Doctors and specialists in, so you don’t have to worry about a scenario like this playing out.
The second option is to upgrade your medical aid plan.
This is easier said than done. Who wouldn’t want to be on the best medical aid plan in the market. A little word called “affordability” puts a handbrake on that idea very quickly, doesn’t it? The medical aid plan you belong to has very little to do with the benefits. Your affordability places you in a box with a couple of options, and generally we pick what we think is the best plan our money can buy.
- Every medical aid will have you covered at 100% of their tariff rates
- Better plans might cover you at 200% of their tariff rates
- And the top plans at 300%
Let’s create a hypothetical scenario:
Lindiwe belongs to a medical aid plan that covers her in-hospital expenses at 100% of her scheme’s tariff rates. She had a hysterectomy 3 months ago and recently she received a bill in the post. The gynaecologist charged R30,000 for the procedure and Lindiwe’s medical aid only covers her for R10,000 of that – she is being charged 200% more than the agreed rate that the medical aid is willing to pay.
If Lindiwe was on a plan that covered 300% of medical aid rates then she would have been covered.
Your third option
Take out a Medical Gap Cover policy. A Medical Gap Cover policy is designed to cover the exact shortfall we just mentioned in the above example. If Lindiwe had a Medical Gap Cover policy, she could have taken her unpaid bill and submitted it to the insurer. Depending on the rate of additional cover she had opted for (some Medical Gap Cover companies will cover up to 500%) the outstanding R20 000 bill would have been paid out to her. She could then use that money to square off her outstanding bill with the doctor. Lindiwe would have avoided being out of pocket & not had to self-fund the shortfall.
If you belong to a medical scheme, there is a good chance that at some point down the line you will end up with an unpaid bill. You can either decide to run that risk, or for a few hundred bucks a month, cover that risk with a Medical Gap Cover policy.
Until next time
The Wise About Life team