The Nature and Purpose of Medical Aid Plans
Strictly speaking, any scheme designed to assist an individual or even an entire nation to cope with illness and its consequences may reasonably be thought of as a medical aid plan. This loose definition might even include the sort of assistance provided by international humanitarian organisations such as the Red Cross and Médecins Sans Frontières. In practice, however, and especially in South Africa, this phrase is used to describe a particular type of scheme that shares certain similarities with an insurance policy, but that is intended to provide extensive financial support to defray the cost of the various private healthcare services involved in the treatment of an illness.
Although the financial model underlying these schemes parallels that of a typical short-term insurance product in that it is based upon risk shared between those covered, the benefits provided by medical aid plans differ vastly from those offered by conventional insurers. That said, the nation’s insurance companies do offer a cheaper type of product that is designed to provide a degree of financial relief in certain specified circumstances.
Referred to as a hospital cash plan, this type of insurance cover pays the policyholder a fixed sum on each day that he or she may be required to undergo treatment as an in-patient, while all other expenses such as GP visits or prescription costs, incurred at any other time, remain the sole responsibility of the policyholder. In practice, the actual daily amounts paid come nowhere close to meeting the actual costs of treatment and are intended more as a means to defray any incidental expenses and to compensate for possible loss of earnings. Given that a simple appendectomy could cost as much as R48 000 and a day in hospital over R5 000, the need for a more cost-related form of cover is obvious and this is the purpose of medical aid plans.
Providing cover for a period of 12 months at a time, these schemes are funded by monthly premium payments that differ according to the benefits offered. Basic to all such schemes and their various products are a set of prescribed minimum benefits mandated by the Medical Schemes Act that includes cover for all costs arising from the treatment of twenty-five chronic illnesses; among them diabetes and epilepsy. It should be noted that insurance companies are subject to no such mandate and that even the more comprehensive hospital plans available from South Africa’s dedicated medical aid schemes may only do so while the member is an in-patient. Despite this limitation, however, this still offers an affordable option for a young, unmarried individual whose general health is good, providing a valuable hedge against the huge, unexpected expense of a serious car accident or an emergency appendectomy.
For families, the options are numerous and often confusing. Put simply, these amount to a contract in which a scheme undertakes to cover all or most of the expenses relating to certain pre-agreed medical conditions up to a pre-agreed annual limit. Many employers operate group schemes for their staff and subsidise premiums while the self-employed are free to shop around for the best deal. At KeyHealth, our medical aid plans are designed to be comprehensive, focused on clearly-defined, relevant core benefits, of which some are unique, and, above all, affordable.