The Relative Merits of Medical Scheme and Health Insurance
Even though this is a choice that has existed for more than half a century, the chances remain fairly high that, in any debate of medical schemes vs health insurance, a significant percentage of South Africans would express the belief that the two are synonymous. In practice, however, there are some marked differences between these two forms of cover and it can be especially important for a prospective purchaser to be aware of their nature when contemplating which of them may best meet their needs.
To begin with, the former description applies to around one hundred organisations in South Arica that are required, by law, to operate on a non-profit basis. The business of these organisations is to provide assistance with the expenses incurred by their members as a result of illness or accident as determined by a scheme’s rules and in accordance with defined managed healthcare protocols. They are obliged to operate under the terms defined by the Medical Schemes Act (No 131 of 1998) and their performance is overseen by a specially appointed council (CMS) created under the same act.
By contrast, health insurance is a product of the same industry that, among other things, provides cover for motor vehicles, household contents and funeral expenses. As such, its activities are regulated by the Short-term Insurance Act and are monitored by the industry’s ombudsman. In common with its other products, those relating to illness and its care are designed to cover unforeseen but clearly defined risks. The payments made to claimants are not determined by the actual costs of diagnosis, treatment and care but by the specific sum assured for a given contingency under the terms of the policy.
In terms of the cover provided, although their premiums are somewhat higher, medical aid schemes offer a far more comprehensive form of cover that is designed to meet all or most of the actual expense of treatment, medication, consultations and any other healthcare that may be required throughout the year. Their cover applies to all illnesses including chronic diseases and incorporates all of the prescribed minimum benefits (PMBs) defined by act No 131.
This is in sharp contrast to health insurance products that are not required to, and generally do not include cover for PMBs. Typically a policy will only fulfil claims that arise while the holder is receiving treatment as an in-patient. Known as hospital plans, they are not intended to meet the costs but pay a fixed sum, the amount of which is determined by the premiums, for each day that the policyholder remains in hospital and do not cover any out-patient contingencies such as prescriptions or GP visits.
Clearly, the benefits offered by medical schemes far exceed those of the more limited health insurance products. However, a hospital plan can be perfectly adequate for a young, single individual who enjoys good general health but who is unable to afford more. The latter can also provide a useful supplement for scheme members, helping to meet co-payments and the various non-medical expenses that are the inevitable result of illness and absence from work.
KeyHealth observe a strict policy of supplying cover that is exceptionally comprehensive yet affordable with products that include valuable extras at no charge.