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How Do a Medical Scheme’s Services Differ from Medical Insurance?

Healthcare has become an expensive commodity, even in the public sector, where the salaries of doctors and nurses are relatively modest. In the private sector, there are no such constraints, and the cost of treatment is correspondingly higher. The choice for South Africans needing treatment is often a long wait for attention at a state facility or a hefty bill to be seen immediately by a private practitioner. Most of those who choose the latter option must rely on a medical scheme or an insurance company to assist them in meeting the cost.

In practice, the nation’s short-term insurers were the first to offer any form of financial support with healthcare expenses. They approached this requirement with the same philosophy they applied to vehicle and contents insurance and similar products. The monthly premium determines the amount paid for a given contingency. The sums payable are fixed and have clearly defined limits that fall well short of the actual costs incurred by policyholders. By contrast, the first medical schemes established during the ’60s offered members the means to better meet most of their healthcare costs in full. Nevertheless, it took another two decades for these specialised companies to upgrade their products sufficiently to justify the unavoidably higher premium costs.


The Cost of the Cover

The hospital plan is one of the best examples of how the services differ between these two providers. Both forms of cover apply only when the policyholder or member is undergoing treatment in a hospital. The short-term insurer will pay clients a fixed cash sum for each day spent as an in-patient. By contrast, a medical scheme agrees to meet all or most of the cost of a member’s accommodation and treatment. In practice, many South Africans purchase the cheaper product as a form of gap insurance. The daily sums can be used to meet any co-payments arising from a medical aid product or incidental expenses like hiring a TV or supplementing lost income.

Understandably, some have no alternative but to accept the cheaper option, which can work for those whose general health is mostly good. However, suppose you have a chronic illness, such as diabetes or asthma and need ongoing treatment and medication. In that case, only a medical scheme can be guaranteed to meet your needs fully. These services differ because each party is answerable to a different regulatory body.


Regulations regarding PMBs

In 1998, a government act established the Council for Medical Schemes with a mission to moderate the activities of its members. One of its first interventions was to introduce a list of prescribed minimum benefits (PMBs) that its members must include in every medical aid product. The list named 26 chronic illnesses that require covering, including those mentioned above. By contrast, the Short-term Insurance Act places no obligation on companies to include PMBs in their policies. Hence, a medical scheme is the only viable choice for someone with one of these chronic conditions.


The Extent of the Cover

Naturally, a medical aid company can’t provide such comprehensive cover and compete with the short-term insurers on price. It is, therefore, up to each individual which product will best meet their likely healthcare requirements. Remember, whatever you save on the monthly premiums by choosing an insurance product will only result in payouts that are certain to leave you with a substantial shortfall to make up in person. Medical insurance products pay a fixed sum for each agreed contingency regardless of the associated cost. By contrast, a medical scheme will generally meet the entire cost of treatment or all but a relatively small portion of it.


A Variety of Medical Scheme Cover Options

While it is true that medical aid premiums are higher than those for medical insurance, they offer a choice of products to suit most pockets. As mentioned earlier, the hospital plan offers the cheapest option for those in good general health. Typically, their primary concern is meeting the high cost of a medical emergency or treatment for severe injuries resulting from a motor accident. In return for the lower premium, they agree to settle any out-of-hospital healthcare expenses arising from GP visits or prescription charges during their medical scheme membership.

KeyHealth offers members a choice of six products. At the entry-level, Essence provides low-cost critical cover, while the fully-comprehensive Platinum product exempts members from co-payments for pathology tests and chronic medication. In between, we offer the more comprehensive products, Origin and Equilibrium, among others. The latter includes a savings account. Please click here to learn more about these products and the unique added benefits available to all members of the KeyHealth medical scheme.