Few people in South Africa could meet the cost of major surgery and a lengthy period in hospital from their own pockets. Under the existing two-tier healthcare system, just over 70 per cent of the nation’s citizens rely on state-funded public facilities. The remainder receives their care from the private sector. However, most of the latter group depend on financial support from an insurer or one of the country’s medical aid schemes to cover the inherently higher cost of private treatment.
In some countries, this type of support is known as health insurance. Although these dedicated schemes rely on the same statistical principle (shared risk) as the nation’s insurers, there are significant differences. Anyone seeking assistance towards their private healthcare expenses will need to understand those differences. Let’s explore the nature of shared risk. Each organisation must assume most of its members will make no claims or only minor ones, thus ensuring sufficient premium money to pay the more substantial claims of the minority. A medical scheme measures and reports these as reserves. A medical scheme with a stronger than 25% reserve ration is a stable organisation and has the funds available to cover member’s claims.
The Key Difference between Medical Aid Schemes and Health Insurance
However, medical aid schemes are non-profit companies, while insurance companies have shareholder’s dividends to pay. The difference leads to two very different forms of cover. Conventional insurers offer a guaranteed fixed payout for a given contingency. For example, their hospital cash plans pay the policyholder an agreed sum for each day they spend as an in-patient. The bigger the daily payout, the higher will be the premiums. However, before signing up, you need to know that these daily payments will cover only a fraction of the total treatment costs of a event in hospital.
By contrast, a typical medical aid scheme will cover most, if not all, of the total cost of any necessary private healthcare. While this is more in keeping with most people’s needs, these companies do not offer their members a one-size-fits-all solution. Each of the more than ninety schemes currently operating provides a range of products priced to suit as many members as possible. Not surprisingly, the more extensive the cover, the greater the monthly premiums will be. It is, therefore, essential to focus on a product’s benefits rather than its price.
Where Hospital Plans Come In
Interestingly, most medical aid schemes include hospital plans in their product range. However, unlike the insurance options, these undertake to meet all or most of the expenses incurred while in hospital. Also, in contrast to the profit-making insurers, each of a scheme’s products is required by law to provide certain prescribed minimum benefits (PMB) defined by the Medical Schemes Act 131 of 1998.
Just over 80 per cent of the schemes currently operating are restricted. That means they only accept members from a given company, professional body or named organisation. These offer group medical aid membership at privileged premium rates and might also benefit from part-payment by an employer. Others who require cover will need to apply to one of the unrestricted or so-called open schemes.
Consider Medshield’s Comprehensive Offering
It’s best to identify several affordable products and then compare their benefits. Select the one that will best meet your known needs and those of any dependents you might wish to include. On the other hand, you could save time and money by checking out the nine uniquely comprehensive offerings from Medshield – South Africa’s oldest and most-trusted medical aid scheme.
