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What to consider when changing medical aids

Concepts like medical savings accounts, day-to-day benefits, PMBs and in-hospital benefits explained.

NOMPU SIZIBA: This is the time of the year when people need to consider their medical aid options for the following year. As in the decision of purchasing any other product, there are a number of factors to consider, but this product is quite important because it relates to one’s health and being in a position to be attended to at any point of health vulnerability.

To take us through some of the issues, I’m joined on the line by Sandy van Dijl, the health branch manager in KwaZulu-Natal for Alexander Forbes.

Sandy, thanks very much for joining us on the show. Assuming someone already has a medical aid facility, what are some of the factors that might lead them to consider changing their medical aid options for the following year?

SANDY VAN DIJL: Nompu, thanks very much. Somebody would consider making a change to their medical scheme based on a number of factors. But mainly what we see happening these days is affordability. People are looking for ways to keep themselves on a medical scheme, first of all; and then, second of all, to find some affordability for themselves to continue. So, that would be one of the reasons.

…The other one is obviously that many people have to make choices these days in terms of whom they cover on their medical scheme. And again, we are back to affordability and what people can afford on a month-to-month basis. Everybody is pushed, everybody is finding most things expensive, and needless to say medical schemes are also expensive. That’s why they would consider making a change.

Medical savings account

NOMPU SIZIBA: Sandy, a key option within the medical aid plan is that of a medical savings account, or MSA. Tell us about that, and the purpose it serves, and the pros and cons of making sure that you have this facility.

SANDY VAN DIJL: Medical schemes provide a MSA – some of the option schemes. [That’s] a vehicle that somebody would have within their medical scheme to help them to fund day-to-day expenses. I’m talking specifically about expenses relating to GP consultations, buying a pair of spectacles, getting your normal medication that you would get after seeing the GP – those kind of things. And that allows a member to have access to those types of benefits and make them available to them.

…medical scheme contributions to a MSA are regulated. So, we may not contribute more than 25% of our total monthly contribution to a MSA, and we are therefore limited to the amount of money that we can put into that savings account. A member will typically know at the beginning of the year or towards the end of the year what that savings would be for the following year, and they’d have to work out benefits for the day-to-day type of things that they would have available to them for the year.

So, the pros on that are that, having that built within your medical scheme does make it almost mandatory for you to make provision for your day-to-day expenses.

The con of having a MSA is that that money is not … paid out to you [at the end of the year]….any money that’s left over at the end of the year gets carried forward to the next year.

So, again, just taking a step back in terms of a pro, a member doesn’t lose any money that they don’t use in the savings, but they can’t access that money, so to speak, if they stay on a plan similar to the one that they are on, because the savings then have to roll over and they then in the new benefit year get access to new benefits, plus the additional savings that they carried over from one year to the next.

Prescribed minimum benefits

NOMPU SIZIBA: The concept of PMBs – what does that speak to? Presumably this applies to all registered medical aid schemes?

SANDY VAN DIJL: That is correct. It’s commonly referred to as prescribed minimum benefits. Those are benefits that the scheme is prescribed to provide to a member. Typically, they are about 270 diagnoses and treatments cares that get made available to members, as well as 25 chronic conditions that the member has access to. Those are for life-threatening conditions … things where the member needs immediate care….Those benefits cannot be paid from your MSA.

So, when a medical scheme is required to pay a PMB, they may not take those funds from a savings account; but the scheme must make those benefits available to every single member, no matter what plan that member belongs to on a medical scheme.

Hospital plans

NOMPU SIZIBA: So, if you are quite a healthy type of person who doesn’t suffer from any chronic illnesses and the like, perhaps one can opt for a hospital benefit type scheme. Tell us about the benefits of those.

SANDY VAN DIJL: Yes, members can opt for a hospital type of plan. Those are typically plans that just cover your in-hospital events. One thing that members need to be cautious about is that, when we talk about in-hospital benefits, we are talking about you being booked in, and you have that little band around your arm – that is hospital benefits. Often members get confused and say, yes, but I had to make use of the casualty [department], which should be a hospital benefit. Some schemes don’t make provision for that as your hospital benefit. Those typically would become an out-of-pocket expense if you were on a hospital plan. If you had a plan with a MSA, those benefits would be paid from your MSA.

But there are benefits to members. When I’m really healthy and I don’t want to make a contribution towards a MSA, I can opt for a hospital plan.

We always caution our members, however, to say if you are healthy and you are not making provision for any day-to-day benefits through your medical scheme, do remember to try and make a saving for yourself on the side, just in case.

Don’t leave yourself short. Generally we find healthy members want to opt for their major medical risks – e.g. car accidents, really severe illnesses – to be taken care of, and those are usually done through hospital benefits. But … just make sure that you have some available money to be able to cover [day-to-day] expenses if you do need it.

NOMPU SIZIBA: Any danger that those hospital covers can be exhausted, depending on what accident or illness you [may] end up having, and how long you end up in hospital?

SANDY VAN DIJL: Nompu, remember that life-threatening conditions in most cases are PMBs, and schemes would need to cover those. You would only generally run the risk of running out of in-hospital benefits if you were on a plan that had an overall hospital limit.

…[It’s important for members to check] how those benefits are covered when you are in hospital. So, what is the rate of reimbursement in the medical scheme – because that you need to be very aware of – what am I reimbursed when I’m in hospital?

Overall there are a lot of schemes that cover your in-hospital costs as an unlimited benefit. And in a PMB environment the schemes are required to cover your costs in full, and no costs then come from the MSA. You should typically not have a co-payment as a PMB.

So, generally speaking, healthy members that choose a hospital plan should have cover that they require, and have the prescribed minimum benefit cover built into their plan nonetheless.

Considerations for families

NOMPU SIZIBA: If you have a family and you’ve got a couple of kids, is it best to go for the hospital option, or the medical aid option?

SANDY VAN DIJL: Tricky.

Typically the advice that I would give to somebody who has a family – I would far rather advise the member to be on a plan that gives me both in-hospital costs and a MSA, just so that I’m making provision for my expenses, both from an in-hospital and a day-to-day perspective.

And just to analyse it: where are those children in terms of their ages, because, remember, different ages bring along different types of requirements. So, orthodontic treatment for a child who starts to get to the age of 12 might become really relevant. And, when you have a MSA, you are not always required to fund those things out of your pocket, trying to make up for the expenses. Where your MSA is given to you in advance, you have a lot more money available to you up front, rather than you trying to fund that and you are having to take out lump funds from savings.

NOMPU SIZIBA: That was Sandy van Dijl, a health branch manager in KwaZulu-Natal for Alexander Forbes.

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Stay away from Medical Aids that forces you to go to specific providers, the so called PPN ( preferred provider networks )……stay away STAY AWAY.

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