The cost of living has skyrocketed this year and most families are having to tighten their belts in order to make ends meet each month. Individuals are therefore under pressure to eliminate expenses that are not delivering real value to their lives. Gone are the days where South Africans are prepared to pay for services or benefits they are not using or do not need.
Medical Aids are famous for lumping benefits together and charging fixed premiums to their members. Each year, exorbitant increases are announced, and consumers are expected to absorb these additional costs into their budgets even though in most cases, premium increase percentages are higher than average salary increases.
In previous years, medical schemes have passed annual increases in the range of inflation plus 3-5%, which would have meant total increases of 6-8%. However, for 2021, increases have been in the 4-6% range (with several schemes passing increases as low as 4%). One medical aid (Discovery Health) has come in with a 0% increase, which might fool consumers initially into thinking that would be the best option, but it seems the scheme has plans to pass an increase in June 2021.
Consumers must not be fooled by the percentage increases announced by medical schemes but should rather take a deeper look at price versus benefit and what the total impact will be to their pockets over the full year, in other words the true cost, including what is NOT covered in their medical plan.
Even though these 2021 price increases are the lowest increases the industry has seen for some time, the consumer remains concerned and is looking for ways to save on this onerous monthly expense. The conundrum is that given current uncertainties with COVID-19, having a medical aid and access to private healthcare, has become increasingly important but also increasingly burdensome given that medical aid premiums in some cases are costing families of four or more the equivalent of a home loan repayment and is now one of their biggest monthly expenses.
Medical scheme members feel hard done by and disenchanted with their medical schemes because in addition to the incredibly high premiums they pay monthly, they still find themselves forking out money for day-to-day medical expenses, over the counter medication, co-payments and short-payments.
What should consumers do if they can’t afford their medical aid premium increase for 2021?
First – do not cancel your medical aid unless it’s your absolute last resort! In the short-term you might save on monthly premiums, however if you are not covered, an unexpected illness or accident can ruin you financially, or you may be forced to compromise on the care you receive as you can no longer afford the best.
According to a recent study conducted by the American Journal of Public Health, more than half of all bankruptcies (58%) can be tied back to medical expenses and an estimated 530,000 families in America file for bankruptcy each year because of medical bills and health issues. While exact or similar stats are not available in South Africa, one can imagine that those having to fund medical procedures privately themselves could end up in a similar situation. There is no doubt that having the right medical aid in place and additional insurance like Gap Cover can save you and your family from financial disaster.
Second – know and understand your current plan inside and out. It is important that you understand exactly what you are covered for, what benefits you receive and at what rates. It is possible that you are ‘over-insured’ on your current plan. Even though it’s better to be safe than sorry when it comes to your health cover, you could be better off financially and you could be saving money by changing to a different plan instead of paying a high premium for cover you do not need. For example, if you are not planning to have children then why be on a plan with top maternity benefits?
Third – review past medical costs. It is important that you keep track of your medical expenses. That way you can review the extras you are spending money on outside of your medical scheme and try to find a plan that better matches your needs. Also, you might see that you are spending so much on out-of-hospital expenses that a simple hospital plan will no longer suffice, and a more comprehensive plan would actually save you money over time, or vice-versa.
Considering changing plans?
When considering a change to your medical aid plan, or a change of schemes, there are a few things to keep in mind. Such as, it is important that your age and current health-risks are assessed before changing plans.
By law, your new medical scheme is allowed to provide three underwriting conditions:
1. A three-month general waiting period where no claims are covered besides the prescribed minimum benefits and chronic conditions.
2. A 12-month, condition-specific waiting period if you have been diagnosed with a pre-existing condition, for example cholesterol. The new scheme might not cover any costs related to that condition for a year. This waiting period can only be applied if you have not been a member of a scheme for 24 months or if you do not join a new scheme within three months.
3. A late joiner penalty, this only applies if you did not previously belong to a medical scheme and are 35 or older.
All of the above considered, unless you are incredibly healthy and the saving is significant, it might be the best option to stay with your current scheme and rather just change plans to better suit your needs.
Finally, find the best plan for you, based on your current health, your age, your day-to-day needs, your risks, and how many dependents you have.
Review your plan in detail alongside the plan you are considering. Check what it covers and what it does not. The better you understand this, the less likely you are to incur additional expenses during the year. For example, your scheme may specify that you need to get authorisations before consulting a specialist and failing to do so can be a costly mistake as your claim will be declined.
Reviewing your medical scheme and plan can be overwhelming and extremely time consuming without help from technology. It is advisable to use online tools like http://www.medicalaid.co.za which is South Africa’s best medical scheme comparison website. Here you will be able to find the best medical cover for your healthcare needs and budget. The comparison looks at monthly premium, hospital choice, overall annual limit, cancer cover, reimbursement rate, day-to-day cover, benefits, MRI/CT scans, maternity benefits and chronic cover.
Most schemes allow you to downgrade during the year, but will only allow upgrades in the renewal window (November/December) effective 1 January of the following year.
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