Comparing Medical Aid Schemes with Medical Insurance
Anyone living in South Africa will be aware that the state-funded health service is under severe pressure and failing to cope with the combination of growing demand and shrinking funds. Alternatively, the country boasts an extensive, well-equipped and efficient private healthcare sector but, without some form of financial assistance, only very few can afford to enjoy its services. Suitable financial assistance is available to South Africans, either in the form of medical aid schemes or as medical insurance but, while some may believe that the two are synonymous, in fact, they differ in several important ways.
Given that the cost of the former has increased in parallel with rising costs, insurers have taken advantage of a gap in the market to create new and cheaper insurance products to offset healthcare costs. One marked and significant difference between these products and those offered by medical schemes is that although more expensive, the latter offer their members a more comprehensive range of benefits.
The type of cover also varies with insurers offering a so-called, stated benefits contract that pays a fixed sum determined by the premium price. Furthermore, since they are not under the regulation of the CMS, insurance companies are not obliged to provide certain minimum benefits prescribed by the regulator.
Claims are also handled differently. Medical schemes pay the majority, if not all, of the costs incurred directly to the service providers. Insurers, however, pay a sum that seldom covers more than a small proportion of the actual costs, to the claimant, who must then settle the entire amount due. Although the monthly premiums may be higher, this clearly identifies the former as the more cost-effective option and many chose to purchase the insurance product simply to cover incidental expenses, such as loss of income during hospitalisation.
Finally, while no payments made to an insurer for this purpose are tax-deductible, tax payers are permitted to deduct much of the cost of their premiums to their medical schemes from their monthly PAYE obligation. Talk to KeyHealth about our range of comprehensive but affordable options.