Understanding Hospital Plans and the Cover that they provide
Given the constraints that have been a feature of South Africa’s economy in recent years, all but the wealthiest of its citizens have been forced to find ways in which they can limit their living costs in order to keep servicing their bonds and credit card debt. While measures such as delaying the replacement of the family car for a year or two or taking a local vacation rather than flying off to some exotic destination overseas make a lot of sense, economising on medical aid cover could be a decision that one may well live to regret. That said, many are choosing to do just that, and among the cheaper options that are proving to be popular are hospital plans.
Make no mistake; these can be an excellent form of cover in the right circumstances but it is important to be fully aware of their limitations. Furthermore, it is also necessary to be aware that there are two types of product that have very similar names but vastly different purposes and benefits, depending upon whether they are offered by medical aid schemes or insurance companies. The latter were the first to introduce this type of product back in the ‘60s and then, as now, it operated like any insurance product, settling claims with a fixed cash payment determined by the value of the premium paid.
While both types of hospital plan limit the cover extended to periods during which a main or dependent member is being treated as an in-patient, the fixed daily sums paid by insurance companies fall far short of the average cost of treatment and accommodation. For this reason, they should be seen as no more than a means to offset some of the incidental expenses that may result from being away from home and from work, or perhaps to meet the co-payments that are occasionally required when enrolled in a more comprehensive medical aid scheme.
In practice, medical aids developed this type of product with a specific type of member in mind. Aimed at young, single members with sound general health but still on a relatively modest income, it was intended to buffer them from the unexpected such as a car accident and the crippling cost of undergoing perhaps weeks of treatment in a private clinic. At any other time of the year, the typical hospital plan offers its members no further cover, leaving the otherwise, generally-healthy individual to cover the cost of an occasional GP visit or prescription medication unaided.
Unfortunately, financial difficulties have seen older people also opting for this type of product and simply hoping that they can remain healthy for most of the year. Clearly, this is not an option for anyone that may suffer from a chronic illness and thus require regular treatment and ongoing medication for life. For such an individual, only the year-round protection offered by one of the more comprehensive medical aid products will be able to provide them with adequate cover and a hospital plan will be of little value.
However, much of the higher cost associated with these comprehensive products can be avoided. By appointing preferred service providers and eliminating non-core freebies, KeyHealth is able to offer more core benefits yet highly competitive premiums.