You know the year is slowly drawing to a close when you find yourself having to sit down to review your medical aid plan options again. In the next few weeks medical schemes across South Africa will be inviting their brokers to snazzy product launches, aimed at highlighting all the 2019 plan changes and imminent price hikes. If your broker doesn’t get in touch with you, your scheme will, and when they push a mail into your inbox, you will be asked one simple question – Are you staying put or are you switching your medical aid plan next year?
Every year you should take some time to see if your medical aid plan has worked for you the way you intended it to. It’s great that we get an opportunity to upgrade, downgrade or just stay on the same plan, but so few of us every look at the options presented to us.
We understand that it feels like a “hack” and you have 50 more pressing issues to deal with, but what if we told you it’s possible to get your year-end medical aid review completed in less than 15 minutes.
In fact, all you need to do is ask yourself 3 questions.
Lets get into those questions quickly:
Am I looking to spend more on my medical aid contribution next year?
Let’s get real for a second – when it comes to insurance (and medical aid contributions are included in this category), your plan choice is almost always based on your affordability. We would all like to be on the most comprehensive medical aid plan money can buy, but that’s simply not the reality 🙁
Medical aid plans that are within your budget pop up on your radar, and the only time you might consider a more expensive plan is if you’ve had a significant increase or you’ve managed to free up some money in your personal budget. If you can afford to increase your medical aid contribution, then find new plan choices that fit your adjusted spend and ask a few additional questions:
- Does my extra contribution get me more day-to-day medical savings?
- Does my extra contribution get me a higher rate of in-hospital coverage?
- Does my extra contribution provide me with higher benefit caps in areas like dentistry?
It should be fairly easy to compare your current plan against a new one if it’s with the same medical scheme.
Unfortunately most South Africans are bracing for the knock-on effects of our “technical recession” and simply making their current medical aid contributions each month is already a stretch. If you can’t afford anymore in the way of medical aid contributions next year, this is the next question you should be asking.
How much is my increase going to be and what do I get it for it?
Your medical scheme is going try and keep your annual increase down to single digits (0% – 9%) if they can possibly help it. It’s a balancing act for them. On the one hand they need to increase contributions to try and stay in touch with run away medical inflation. But on the other hand, they can’t risk an increase that scares away their members (that wouldn’t be good for business).
If you are on a medical aid plan that costs R1,000 a month this year, you might be paying R1,100 next year. What are you going to get for your additional R1,200 a year in additional contributions? Well, that’s the question you need to be asking yourself. Probably not too much in the way of additional benefits is the unfortunate answer to that question.
- You will get a little more in the way of medical savings (if you have a plan with that option)
- You will get a little more in the way of other benefit caps
But don’t expect too many enhancements.
If you managed on your current medical aid plan this year, see the price hike (if it’s reasonable) as the medical aid needing to collect more contributions to help fund the increasing costs levied against the scheme. Just like with your short-term insurance, an annual increase is inevitable, and so are medical aid increases.
If you aren’t satisfied with your increase you know what your price point is, so go and have a look at what other options are available to you.
Could I downgrade and still find a suitable plan option?
Count yourself lucky if you can look at increasing your medical aid contributions next year (upgrade your plan). Most members will stay put because of financial constraints, and some might need to downgrade their plans not because they want to, but because they simply can’t afford it. If you need to look at a cheaper plan, here are a few considerations you should make.
- Will my scheme give me a premium discount if I network?
In an effort to curb costs and create medical aid plans that members can afford, some medical schemes provide network hospital options. The concept is smart. The medical scheme uses its member base to get hospitals contracted in as providers. The scheme is able to guarantee the hospitals patients (they are after all businesses that need beds filled) in exchange for reduced fees. The scheme then hands the saving in cost down to the member in the way of a contribution reduction.
As a member if you need to go to hospital (not in an emergency) and you are on a network option, you need to use a hospital in the network.
It makes sense in the following situations:
- You have a network hospital in your area
- You have a network hospital in your area that you are comfortable using
If you never claim from your medical aid, and you don’t really mind what hospital you land up in, then consider a network hospital option that could end up saving you 30% on your premiums each month.
If you do downgrade your plan (we aren’t talking about switching to a network option) it’s important to understand that any reduction in contribution is going to result in a reduction in benefits. That much is obvious. One area of your benefits that might be compromised is your rate of in-hospital cover (that’s the rate at which your medical aid will pay hospital costs). Make sure if you are reducing your in-hospital coverage, that you look to top it up with a medical gap cover product.
Reviewing your medical aid shouldn’t take you that long.
If you can’t increase your contribution, make sure you stay on your current plan if the increase is fair. If you aren’t happy with your new premium, shop around using your 2019 contribution as your price point comparison. If you want to save money by reducing your contributions, look if your scheme offers network options that you could live with. Failing that, downgrade to a cheaper plan but be sure you understand what you are giving up in the way of benefits.
Until next time.
The Wise About Life team