IOL Money Issue 4_November 2020

MONEY NOVEMBER 2020

IOL

THE MEDICAL SCHEME ISSUE

Tips on changing plans What are PMBs?

CONTENTS FEATURES

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South Africa’s five largest medical schemes

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Why it is so important to have medical aid cover

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10 points on choosing the right medical aid

What you need to know about PMBs

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Do you need gap cover?

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REGULARS Rands and Sense with Sydney Mbhele

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Fact File: medical scheme membership Q&A

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Money Basics with Martin Hesse

Money Quiz

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14 18

Planning Perspectives with

Lesego Monareng

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Important contacts and links

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CONTACT US PUBLISHER | Vasantha Angamuthu vasantha@africannewsagency.com MONEY EDITOR | Martin Hesse martin.hesse@inl.co.za PRODUCTION | Renata Ford | renata.ford@inl.co.za DESIGN | Mallory Munien | mallory.munien@inl.co.za Dominique Owen | dominique.owen@inl.co.za BUSINESS DEVELOPMENT | Keshni Odayan keshni.odayan@inl.co.za SALES | Charl Reineke | charl@africannewsagency.com Kyle Villet | kyle.villet@africannewsagency.com GENERAL ENQUIRIES | info@anapublishing.com

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Doctors won’t make you healthy.

Nutritionists won’t make you slim. Teachers won’t make you smart. Gurus won’t make you calm. Mentors won’t make you rich. Trainers won’t make you fit. Ultimately, you have to take responsibility. Save yourself.

NAVAL RAVIKANT

ENTREPENEUR AND INVESTOR

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FROM THE EDITOR THIS is the time of year when South Africa’s medical schemes announce their increases for the following year and when they give their members a window period during which they can change their plans (known in the industry as benefit options) upwards or downwards.

So this is an ideal time to reassess the medical cover you and your family enjoy. To help you, we have compiled this guide, which also highlights what extra cover you may consider, such as gap cover, as well as pitfalls to avoid.

Medical scheme membertship is a must-have, although even the most comprehensive option will not cover all your medical expenses.

The most basic options will at least pay for hospitalisation in a medical emergency and for the prescribed minimum benefit (PMB) conditions, treatment of which in the private sector can amount to hundreds of thousands of rands. As a plus, many schemes offer benefits on the preventative side, such as free screenings.

The alternative would be to have to rely on our notoriously inefficient state healthcare system, which, unfortunately, all too many people have to do.

With government’s controversial National Health Insurance still to be implemented, and no signs of regulation of the fees specialists can charge you, medical scheme cover, despite its shortcomings, is still your best option in the face of rising healthcare costs.

I hope this edition of MONEY gives you what you need to make an informed decision and possibly to save you some money.

Martin Hesse EDITOR | MARTIN HESSE | martin.hesse@inl.co.za

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SOUTH AFRICA’S

L A RGEST MED ICA L SCH EMES There were 79 medical schemes in South Africa at the end of 2018, according to the 2018/19 annual report by the Council for Medical Schemes, down from a high of 146 in 2001. Of the 79 existing schemes, 21 are open schemes, meaning their membership is open to the public, and 58 are restricted schemes, which means they serve only certain industries or organisations.

In total, almost nine million South

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Africans belonged to a medical scheme, either as a member or as a dependant. About four million belonged to restricted schemes and about five million to open schemes.

The five biggest schemes by number of beneficiaries (members and dependants) at the end of 2018 comprised two restricted schemes and three open schemes. Among them they service over two-thirds of the market.

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DISCOVERY HEALTH MEDICAL SCHEME

GOVERNMENT EMPLOYEES MEDICAL SCHEME (GEMS)

Discovery, an open scheme, with 2.8 million beneficiaries, is the biggest scheme in South Africa. Its net assets at the end of 2018 were R17.6 billion. The average age of its beneficiaries was 33.98 years, and 9.06% of its beneficiaries were pensioners.

In 2018, 88.43c of each rand in members’ contributions went towards health care benefits.

This closed scheme for government employees is the second-largest scheme in the country, with 1.8 million beneficiaries. Its net assets at the end of 2018 were R9.5 billion. The average age of its beneficiaries was 30.73 years, and 6.24% of its beneficiaries were pensioners. In 2018, 86.64c of each rand in member contributions was spent on health care for members.

BONITAS MEDICAL FUND

SA POLICE SERVICE MEDICAL SCHEME (POLMED)

MOMENTUM HEALTH

Bonitas is South Africa’s second-largest open scheme, with 713 190 beneficiaries. Its net assets at the end of 2018 were R4.1 billion. The average age of its beneficiaries was 34.60 years, and 9.53% of its beneficiaries were pensioners. In 2018, 91.12c of each rand contributed by members went towards their health care.

This closed scheme for SAPS members had 502 996 beneficiaries at the end of 2018. Its net assets amounted to R4.0 billion. The average age of its beneficiaries was a young 27.60 years, and only 3.10% of the beneficiaries were pensioners.

In 2018, the scheme spent 102.12c on healthcare for each rand contributed by members, which means the scheme was losing money.

This open scheme operated by the Momentum Metropolitan group had 298 071 beneficiaries at the end of 2018. Its net assets were R1.1 billion. The average age of its beneficiaries was 32.99 years, and 8.41% of its beneficiaries were pensioners. Of each rand that members contributed in 2018, 92.97c went towards their healthcare.

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Why it is so so important to have medical aid cover FADIA ARNOLD relates her search for a medical scheme to cover the birth of her child AFTER being tenderly nudged into the real world when I turned 18 by my parents removing me from their medical aid, I spent the next decade feeling that if I rarely, if not ever, used my parent’s medical aid then surely I could survive just fine on my own without it.

Cut to my honeymoon positive pregnancy test at 32 years old, I immediately panicked that I did not have medical aid and my husband, who had just moved jobs at the time, had not yet had the opportunity to place me on his employee benefit medical aid as a beneficiary. I had heard horror stories from friends and family who had not had any medical aid as a part of their birth plan and being bombarded almost immediately subsequent to birth with unaffordable hospital bills they simply could not pay, resulting in the debt having to be collected by alternative means.

The hunt for a medical scheme I had quickly started researching different kinds of medical schemes; however, the task was daunting as each medical scheme had different options in respect of monthly cover for chronic medication inclusive or exclusive of a hospital plan and gap cover. Some schemes only included hospital cover and most did not include gap cover.

Gap cover, which I was clueless about and had never heard of, was to be purchased separately or at

an additional price on top of the medical aid cover price.

Nihaal Kamedien, co-founder and director of Platinum Medical Administrators, a company offering full medical practice management training as well as professional consultancy and advisory services for medical practitioners and specialists, explains that gap cover exists “to ensure that any shortfalls in hospital fees and not covered by a patient’s medical aid scheme are covered so the patient is not out of pocket personally without due warning”.

Kamedien further states that gap cover could ensure “extra coverage of three to four times more than your medical aid will pay out for a hospital stay” and that “the sad reality is that far too many medical aid patients only become aware of gap cover in the event that there is a shortfall in their hospital and or medical specialist fees and are

shocked and surprised when asked to cover the shortfall privately”.

Accordingly, when deciding which medical aid scheme is most personally and financially fit for you and your family, ensure that you enquire with your medical aid scheme about their gap cover options.

In terms of my own personal journey regarding the best medical aid for my birth plan, I initially chose an affordable hospital plan for professionals (any individual with a bachelor’s degree in any field). I found the sign-up process easy and the assistance top drawer.

They further agreed to cover the full hospitalisation stay for the birth at the hospital of my choice as well as no extra cost should there be an emergency Caesarian section, which there was. Even further, they agreed to cover any complications resulting from the pregnancy, which is a pre-existing condition often not covered by medical aid schemes if the patient was not signed up and covered at the time of conception.

However, after all the runaround to obtain my own medical aid, my husband’s staff medical aid under his new employer finally fell into place with the same privileges, and it made more sense financially as a family to be covered that way instead.

Fadia Arnold is the director at Arnold Law Legal Consultancy

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I had heard horror stories from friends and family who had not had any medical aid as

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a part of their birth plan

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The medical aid landscape can be tricky to navigate so it’s best to compare all available schemes and their ranges of plans (benefit options) to find cover that works for your budget and your family’s health.

Bonitas Medical Fund offers the following:

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points

on choosing the right medical aid

1. Analyse your healthcare needs No two people or families are alike – medical needs differ. So do a quick personal healthcare needs analysis to determine what cover you need. If you have dependants, factor in their healthcare needs too. Factors to consider include: l How often you visit your family visit a doctor or specialist l Over-the-counter medication and chronic medication required l Chronic conditions like high blood pressure or diabetes l Specific conditions like cancer, HIV or renal failure l Dentistry l Optometry This will help you decide whether you need a comprehensive medical aid plan or more basic cover, such as a hospital plan.

2. Read the small print Benefits vary from plan to plan, so establish what is and isn’t covered and look at whether

the option offers additional risk benefits, which can save on dayto-date expenses. These may include free wellness screenings (blood pressure, cholesterol, blood sugar and BMI measurements) through to mammograms, pap smears and prostate screening.

In some cases they extend to maternity programmes, dental check-ups, flu vaccinations and more.

3. Managed care options Assess what the medical scheme offers in the way of managed care programmes to help members manage severe chronic conditions such as cancer, diabetes and HIV/ Aids.

4. What about savings?

Medical savings are a fixed amount a scheme gives you at the beginning of the year to cover day-to-day medical expenses that are not covered under your

risk benefits. There are ways to maximise your savings, but first you need to know what your annual allocation is.

5. The day-to-day details Look at what the scheme suggests as a way to make your benefits last, bearing in mind the following: l Some plans require you to use specific GP and hospital networks and have a list of designated service providers (DSPs). These keep costs down because the scheme will have negotiated special rates with these service providers. Check the network in your area before making a final decision. l Must you be referred to a specialist by your GP? l Does your medical scheme plan offer additional GP consultations, which it will pay for, after you have exhausted your day-to-day benefits?

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6. Virtual care and technology Technology and virtual care are being embraced by medical schemes and members. Check what is offered on the plan you’re considering and whether you want access to your benefits 24/7.

7. Age impacts your decision l If you have young children, ensure the option you select provides sufficient child illness benefits. l If older, select a plan that covers chronic conditions and provides sufficient in-hospital cover in the event of hospitalisation 8. Ensure affordability Consider all the costs involved before you make your final decision, such as: l Monthly contributions: a rule of thumb is that contributions should not exceed 10% of your monthly income. l Co-payments. This is part of your healthcare expenses that you are liable for when making use of certain medical services.

These co-payments usually apply to specialist or elective medical procedures and will differ from one medical aid scheme to another.

9. Waiting periods and exclusions The Medical Schemes Act and the specific scheme’s rules determine what waiting period you and your family will be subjected to if you join a scheme, and what exclusions may apply. Each scheme is different, so you need to enquire with the relevant scheme about their exclusion list and waiting periods.

10. Brokers Using a broker doesn’t cost you anything. An independent broker will help you work your way through the different options and help choose the medical aid plan best suited to your and your family’s needs.

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Did you know that, whatever medical scheme plan you are on, your scheme must, by law, pay in full for the treatment of the prescribed minimum benefit conditions?

However, for the scheme to pay in full, you need to follow the correct procedures. Rachel Janssens provides more details

What you need to know about

PMBs

11 PRESCRIBED minimum benefits (PMBs) are a list of minimum benefits that all medical schemes must provide to members, irrespective of what benefit option they belong to.

By introducing a list of PMBs in 2000, the Council for Medical Schemes aimed to provide people with continuous care to improve their health and well-being. Health care is made more affordable when members have adequate cover and, in the event of a serious illness or major risk event, they do not run out of medical aid cover or lose benefits, forcing them to go to state hospitals for treatment.

If you have one of the 25 listed chronic illnesses, your medical aid must cover doctor consultations and prescribed tests related to that condition the Council of Medical Schemes.

However, in order to contain the cost of providing this benefit, medical schemes may put measures in place to ensure you have the cover you need without placing the scheme at financial risk. They do this by

PMBs are made up as follows: l Any emergency medical condition, such as a heart attack or injuries from a motor vehicle accident which, without immediate treatment would result in weakened bodily functions, serious and lasting damage to organs or limbs, or death. l 270 medical conditions – for example, childbirth. l 25 defined chronic conditions, such as diabetes and asthma (see list below).

PMBs can be complicated Not all medical schemes openly disclose what you are entitled to, making it important to speak to your healthcare consultant for guidance so that you are treated fairly. For instance, if you have one of the 25 listed chronic PMB conditions, your medical scheme not only has to cover the medication for that condition, it must also cover doctor consultations and prescribed tests related to that condition.

Your healthcare consultant can help you understand what treatment you are entitled to have covered when it comes to your condition.

All medical schemes must cover PMBs in full as regulated by

l Waiting periods that include PMBs if you have had a break in medical aid cover of more than 90 days or where you have not belonged belonged to a medical scheme in the past. l Penalties for going outside its network arrangement or failure to pre-authorise your treatment or hospitalisation.

Schemes have to include these arrangements in their rules and if you do not abide by these, you face having to pay all or part of the cost of the treatment yourself.

Always check your benefits Speak to your healthcare adviser or consultant if your hospitalisation, treatment or chronic condition medication, or test falls within the scope of a PMB but has not been funded correctly or from the correct benefit, such as from your savings account instead of the risk benefit.

1. Setting official procedures for certain treatments.

2. Enforcing the use of medication from a prescribed medicine list.

3. Having designated service providers and hospital networks in place for treating and managing PMBs. Medical schemes are allowed to impose important interventions and restrictions: l Co-payments (payments from your own pocket) for using another service provider or medication that is not on the prescribed medicine list

Which 25 chronic conditions are covered?

Addison’s disease, asthma, bronchiectasis, cardiac failure, cardiomyopathy, coronary artery disease, chronic obstructive pulmonary disorder, chronic renal disease, Crohn’s disease, diabetes insipidus, diabetes mellitus types 1 and 2, dysrhythmias, epilepsy, bipolar mood disorder, hypothyroidism, hypertension, glaucoma, haemophilia, ulcerative colitis, systemic lupus erythematosus, schizophrenia, rheumatoid arthritis, Parkinson’s disease, hyperlipidaemia, multiple sclerosis.

Rachel Janssens is principal consultant at Alexander Forbes Health

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Rands & Sense The link between physical and financial fitness

Sydney Mbhele explains how an active lifestyle can benefit your finances

RESEARCH shows that those who work out regularly reap financial benefits far beyond the cost of a pair of running shoes or a fitbit. Studies have shown that those who exercise regularly earn more than those who don’t.

A survey by OnePoll among 2 000 Americans showed that exercisers earn, on average, $25 000 (about R400 000) more a year than their sedentary counterparts.

Those who fell into the “more active”category (higher-intensity workouts) earned a higher salary than those with low-impact routines. Time magazine found exercisers earned, on average, 9% more than their less active co-workers.

These benefits spill over into earning power and financial habits. Becoming fit and achieving financial resilience require very similar disciplines – you need to plan your goals and track your progress, you need to have determination and focus to stay the course and sometimes make sacrifices for a better outcome.

Here’s how leading an active lifestyle can benefit your finances: 1. Boosted productivity and better performance Exercising three times a week will directly impact your brain’s functioning.

All the extra blood pumped to your grey matter via an increased heart rate will make you more productive for longer and, according to a study by UCLA, “exercise increases growth factors in the brain – making it easier for the brain to grow new neural connections”. In short, you’ll keep getting smarter!

You’ll be less depressed and anxious thanks to the “runners’ high” endorphins

released. In addition, the sluggish brain fog that comes with a sedentary lifestyle will be avoided allowing you to stay sharp and in top form, ready to stand-out from the pack. You’ll show up with the best version of your working self and bosses will notice.

2. Fewer sick days Research shows that those who exercise regularly miss fewer work days than their less active co-workers. So, you’ll be there when the big opportunities arise, ready to show your mettle and seize the day.

3. More focus and discipline It takes planning, focus and discipline to train for a marathon. Getting up and running in the winter cold on the Highveld, or running against the Cape Doctor, requires a level of commitment and selfdiscipline that are likely to spill into all areas of life, from diet to regular health checks, to renewing your car licence on time – to working with a financial planner and carefully managing your finances on an ongoing basis.

4. Lower medical expenses People who exercise regularly are less prone to heart disease, diabetes, hypertension as well as mental health issues such as anxiety and depression.

This means fewer expenses associated with treating these conditions and the cost of living if your ability to earn is negatively affected.

What could be more motivating than knowing exercise will not only make you fitter – it will also make your wallet fatter! Now is the time to plan.

Sydney Mbhele is chief executive: brand at Sanlam

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Q&A: Medical scheme membership A MEDICAL scheme is a non-profit entity controlled by a board of trustees. However, the administration of the scheme is undertaken by a profit-making private company, and it is here that conflicts of interest may arise between members of a scheme and shareholders of its administration company.

For this reason, medical schemes are tightly regulated: they are governed by the Medical Schemes Act and regulation is enforced by the Council for Medical Schemes (CMS), which falls under the Department of Health.

The following Q&A on medical scheme membership is an edited version of information available on the CMS website: Is membership of a medical scheme available to anyone?

Yes, the open enrolment principle means that you can join any medical scheme of your choice.

The exception is membership of restricted schemes, which have been established exclusively for members/staff of a particular employer, profession, trade, industry, calling, association or union.

Can I belong to more than one medical scheme at the same time?

No. You must ensure that your membership of a scheme is cancelled before enrolling with a new scheme.

Can a minor be a member?

A child can be registered as a dependant of a member or, if his or her parents are not members, as a principal member, provided that

This is an edited version of information available on the CMS website

FACT FILE

the eligibility criteria stated in the rules of the scheme. In terms of the Act, dependants are: l Your spouse or life partner; l Dependent children; l Other members of your immediate family for whom you are liable for care and support; or l Any other person who is allowed as a dependant under the rules of the scheme.

A child under the age of 21 is a child dependant; a child over 21 is an adult dependant.

Physically or mentally disabled people can be registered as child dependants if it is allowed in the rules of the particular scheme. If not, they can be registered as adult dependants.

A third-generation dependant is the grandchild of the principal member. Most schemes allow these dependants to be added only if the grandparents have legally adopted the child or where a court of law has awarded guardianship to them.

the relevant contributions are paid on his or her behalf.

If I die, will my registered dependants still be covered?

Yes, without any break in membership and provided contributions are paid. Such members are referred to as continuation members, and one of the dependants (usually the surviving spouse) will become the principal member. In the case of restricted medical schemes, no additional dependants will be allowed. For example, if the surviving spouse remarries, the new partner would not be eligible for membership.

May a medical scheme refuse to admit my dependant?

No. A scheme may not refuse admission if the dependant meets

Go to www.medicalschemes.com for more information about the Council for Medical Schemes and its functions.

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MONEY BASICS

pixaby.com

with MARTIN HESSE

Types of cover for sickness and injury I RECENTLY received an email from a highly stressed reader. Her daughter needed an operation and to have a prosthesis fitted. The quote for the daughter’s six-day hospital stay plus specialists’ bills plus the prosthesis was R330 000

(the prosthesis on its own was almost half of that). The “medical aid scheme” the reader belonged to was prepared to pay only R77 000, leaving an out-of-pocket shortfall of R253 000.

When I investigated, I discovered

it was not a medical scheme at all; it was short-term health insurance, which is a much more basic type of cover. The trouble was, the health insurance was dressed up to look like medical-scheme cover on the website. Unless you went to the

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MEDICAL SCHEME COVER This is the most comprehensive medical cover you can get, even if you are on a budget-level plan.

Medical schemes fall under their own separate piece of legislation, the Medical Schemes Act, which requires a high level of consumer protection.

The most important features of medical schemes are: l An open scheme (one that is not restricted to a certain worker group) cannot refuse you membership, even if you are sick and/or old. However, the scheme can impose a waiting period (a fixed initial period of, for example, six months, during which it will not pay claims) and higher premiums in the form of what are known as late-joiner penalties for people who join later in life and have not had medical scheme cover previously. l The scheme must provide full cover for medical emergencies and a list of life-threatening conditions, known as the prescribed minimum benefits (PMBs), even on its lowest plans. (See article on page 10). l A medical scheme cannot arbitrarily cancel your membership if you are deemed high-risk. Only if you fail to pay your premiums may a scheme stop covering you.

Note that even if you are on one of its top plans, the cover your medical scheme provides is likely to fall short, especially when it comes to paying specialists’ bills.

Specialists may charge three or four times the rates set by the scheme for

treatments and consultations.

GAP COVER This is short-term insurance (governed by the Short-term Insurance Act), that provides “top-up” cover for specialists during hospital admissions. If a specialist charges, for example, R8 000, but the scheme covers only R4 000, the gap cover policy will pay for the outstanding R4 000. Gap cover is subject to an overall annual limit of R157 000 per individual. These policies are generally relatively affordable, at only a few hundred rand per month per family. (See article on gap cover on page 16).

HEALTH INSURANCE This is cover provided by insurance companies for hospitalisation, typically offering a fixed rate per day in hospital, and/or for primary-care expenses such as GP consultations, prescribed medication, basic dentistry and some optometry at designated service providers. It is a very poor substitute for medical scheme cover.

Unlike medical schemes, insurers offering this (and gap cover outlined above) may refuse to cover you if you are already sick or if you are over a certain age. If you do have cover and claim too often, they can cancel your cover, leaving you stranded. Their websites may entice you into thinking their offerings are

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bottom of the webpage, where it states “This is not a medical aid scheme”, you would be hard pressed to tell the difference between that site and a medical scheme site.

It is vitally important, when you buy any type of insurance, to know exactly what you are insured for.

This applies especially to health cover, because there is a range of products out there, which provide very different types of cover and which apply under different circumstances.

as good as medical scheme cover but at a far lower rate.

But you get what you pay for, or, should I say, you don’t get what you don’t pay for. When it comes to operations and specialist treatments – if you want to be treated in a private and not a state hospital – this cover falls far short of the amount of money required, as outlined in my example in the opening paragraphs.

DREAD DISEASE COVER This is a life insurance product, and often comes in a package along with life and disability cover. It pays out a lump sum, determined by you, with premiums set accordingly, if you are diagnosed with a so-called dread disease – typically cancer, stroke, and any heart-related disease. The severity of the disease determines the percentage of total cover paid out.

The money can be used for anything you like, but is aimed at non-medical expenses associated with contracting a dread disease, such as paying for extra help in the house.

Again, because it is insurance and not medical scheme cover, an insurer may refuse to cover you if you are already sick, or exclude your particular illness from your cover, or impose a higher premium.

Like all life insurance products, the older you are when you take out the cover, the higher your premiums will be.

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Do you need There are no laws regulating what medical specialists may charge you, and they are charging more and more, with cover by medical schemes falling further and further behind. For this reason you may consider taking out gap cover

GAP COVER?

THE growing values of gap cover claims show a marked increase in the shortfalls between what medical schemes pay versus what healthcare providers charge for in-hospital procedures. Recently, Sirago Underwriting Managers, a gap insurance provider, paid out almost R500k on just three claims for the gap portion alone. Without gap cover in place, a medical scheme member would be liable for this shortfall from his or her own pocket.

Gap insurance covers the difference between the rate that healthcare specialists charge for in-hospital procedures versus what medical schemes pay. Unlike the pharmaceutical industry, there is no pricing regulation on healthcare provider tariffs, and with South Africa facing

a dire shortage of healthcare professionals, specialists are free to charge any rate, often 300% to 500% higher than the rate paid by medical schemes. If your medical scheme option only pays out at 100% of tariff, you will then be liable to pay the shortfall of the other 200% to 400% charged by your healthcare provider as an “out of pocket” expense, which can easily run into tens of thousands of Rands.

“Sirago recently paid three large claims for cancer and musculoskeletal surgeries coming in at R153k, R142k and R162k per claim – until recently, claims of this magnitude were the exception, but are now becoming more common,” explains Martin Rimmer, chief executive of Sirago Underwriting Managers.

17 “A few years ago, gap claims averaged around R6 000 to R12 000. Because of the significant increase in claims volumes, the average gap claim remains within that range.

However, we are seeing claims of R40k almost on a daily basis.

“It remains to be seen whether this jump is an anomaly attributed to the Covid-19 pandemic, and whether claims will revert in the coming months. These claims are for tariff shortfalls not covered by medical schemes that clients would have had to pay from their own pockets, had they not had gap insurance in place. It is certainly not only members on lower benefit options that are facing these shortfalls – even on comprehensive, top-of-the-range medical scheme benefit options, members are facing onerous tariff shortfalls for in-hospital procedures,” says Rimmer.

Medical schemes recently announced their tariffs and benefit changes for 2021, and members have until the beginning of December to make any changes to their medical scheme benefits for the following year. In the current environment where private healthcare costs are in an unsustainable upward spiral, gap cover is proving as essential as private medical scheme membership.

“When you consider the potential financial implications of a shortfall on your medical cover, and that a gap cover premium is about R400 per month for a family, and each family member is covered for up to R164 000 per year (R174K from 1 January 2021), it is clear that gap cover is a non-negotiable part of your healthcare strategy. A single gap claim of R60k would be the equivalent of almost 13 years of premium payments at current premium rates,” says Rimmer.

An analysis of private healthcare costs from 2000 to 2012 show that in real terms, costs doubled.

The cost trajectory tells us that by

Specialists are free to charge any rate, often 300% to 500% higher than the rate paid by medical schemes 2028, they will have doubled again.

Medical schemes, which carry the bulk of these costs, rank within the top five highest household expenses for many South Africans.

Most notable is that while medical scheme contributions increase every year, the benefits are actually decreasing, while healthcare costs are increasing by much more than inflation.

This places a double burden on consumers who not only will be forking out more for the same or less medical scheme benefits, but will also shell out for greater out-ofpocket healthcare expenditure than ever before.

“At the same time, consumers remain under tremendous financial pressure and over the coming

weeks may be looking at ways to save on healthcare costs by cutting back on their benefits.

Rimmer advises that you always negotiate the pricing of any planned surgery with healthcare providers, and ask for a formal quotes – from the surgeon to the anaesthetist.

That way there are no surprises or unexpected costs creeping in after the fact, unless there were specific complications during the procedure.

Finally, be wary of doctors asking you upfront whether you have gap cover or not – overbilling based on your medical cover insurance portfolio is a growing unethical practice by some unscrupulous medical specialists.

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Money Quiz Test yourself on your financial knowledge 1.If you put R1000 into an investment that offered compound interest of 20% a year, how much would you have after 20 years (rounded to the closest rand)? a) R5 000 b) R8 546 c) R20 000 d) R38 337 2. What is a bond? a) A debt instrument b) A type of derivative c) A capital venture equity investment d) A property investment 3. Who said derivatives are financial weapons of mass destruction? a) John Maynard Keynes b) Albert Einstein c) Warren Buffett d) George Soros 4. What index measures the overall performance of companies listed on the JSE? a) JSE/FTSE All-share Index b) JSE/FTSE Resources Index c) S&P 500 Index d) MSCI World Index 5. When does the tax year end? a) February 28 (or 29 in a leap year) b) July 31 c) September 30 d) December 31 6. In what year did South Africa adopt the Rand as its

unit of currency? a) 1910 b) 1948 c) 1961 d) 1970

7. Who is the Insurance Ombudsman? a) Zweli Mkhize b) Judge Ron McLaren c) Judge Bernard Ngoepe d) Tito Mboweni

8. Which of the following are classified as retirement funds? a) Company pension funds b) Company provident funds c) Retirement annuity funds d) All of the above

9. Which government body regulates the prudential affairs of banks? a) The Department of Trade and Industry b) The SA Reserve Bank c) The Financial Sector Conduct Authority d) The SA Revenue Service

10. What is the maximum percentage of your annual remuneration that you can contribute tax-free to retirement funds? a) 10% up to R100 000 b) 14.5% up to R200 000 c) 27.5% up to R350 000 d) There is no maximum.

ANSWERS: 1d, 2a, 3c, 4a, 5a, 6c, 7b, 8d, 9b, 10c.

Planning Perspectives

Health is wealth – looking after your most important asset If you don’t start looking after yourself when you are young, you won’t realise the benefits of good health until it’s too late, writes Lesego Monareng

LIFE is hectic. As we try to balance our careers in a depressed economy, we often forget about taking care of our health. Or we don’t have time. Or we think: “I’ll start tomorrow, right now I’m focusing on paying the bills.”

This is especially true with younger people who are naturally healthier. But if you don’t start looking after yourself when you are young, you won’t realise the benefits of good health until it’s too late.

As a financial planner, I have seen how poor health can completely ruin financial independence on both ends of the spectrum, and it can wreck your quality of life. Remember, your health doesn’t just affect your body – it has knock-on implications for everyone who is close to you and dependent on you.

Being sick curtails your ability to earn an income, which affects your ability to look after your family and save for the future.

Here are some guidelines to assist with health planning: Get medical aid – now!

Consult a qualified healthcare broker or a Certified Financial Planner (CFP) and choose a plan that suits your budget and medical requirements.

Medical aids are structured in a way that younger people subsidise the costs of the elderly. If you only decide to join a scheme when you are older, you will pay much higher premiums.

If you are young and in good health, you probably only need a hospital plan, which covers you in the event of an accident or if you need a specific

19 procedure in hospital.

You don’t want to have to sell your car to pay for an emergency appendectomy!

Look after yourself You can’t change your genes, but you can change your habits and do your best to avoid all sorts of lifestyle diseases like heart disease, stroke, hypertension, diabetes and obesity.

A good diet, regular exercise and emotional wellbeing go a long way to reducing future costs associated with health.

A gym membership and healthier food might be more costly in the short term, but will benefit you tremendously in the future.

Consider life cover Life cover is an umbrella term for various insurance products that protect you and your family in the event of your death, or if you become severely ill or disabled. Consult a financial planner to get the balance right.

Be proactive At the end of the day, medical costs are inevitable but you don’t have to be the victim of a massive hospital bill. Take proactive steps to look after your health, and set up all the necessary safety nets to soften the financial blow.

Current legislation permits a deduction against tax for valid contributions towards medical expenses.

There are so many reasons to get your health planning sorted. Don’t start tomorrow, start today!

Lesego Monareng is a CFP and managing director of KLU Wealth & Legacy Management

Information

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click on the links to visit the website

Here are sources that can help you with financial education, give you more information on savings and investments, and afford you recourse if you have a consumer complaint or a complaint against a financial services provider.

FINANCIAL EDUCATION Financial Sector Conduct Authority MyMoney Learning Series https://www.fscamymoney.co.za South African Savings Institute #WaysToSave https://waystosave.co.za/ OMBUDSMAN & REGULATORS BANKING Ombudsman for Banking Services ShareCall: 0860 800 900 or phone: 011 712 1800 Email: info@obssa.co.za www.obssa.co.za CONSUMER ISSUES National Consumer Commission Toll-free: 0860 003 600 or phone: 012 428 7000 Email: complaints@thencc.org.za www.thencc.gov.za Consumer Goods and Services Ombud ShareCall: 0860 000 272 Email: info@cgso.org.za www.cgso.org.za CREDIT AND DEBT Credit Ombud MaxiCall: 0861 662 837 or phone: 011 781 6431 Email: ombud@creditombud.org.za www.creditombud.org.za National Credit Regulator ShareCall: 0860 627 627 or phone: 011 554 2600 Email: complaints@ncr.org.za www.ncr.org.za

FINANCIAL ADVICE Ombud for Financial Services Providers phone: 012 470 9080 or 012 762 5000 Email: info@faisombud.co.za www.faisombud.co.za INVESTMENTS Financial Sector Conduct Authority ShareCall 0800 110 443 or 0800 202 087 Email: info@fsca.co.za www.fsca.co.za LIFE INSURANCE Ombudsman for Long-term Insurance ShareCall 0860 103 236 or phone: 021 657 5000 Email: info@ombud.co.za www.ombud.co.za MEDICAL SCHEMES Council for Medical Schemes MaxiCall: 0861 123 267 Email: complaints@medicalschemes.com www.medicalschemes.com RETIREMENT FUNDS Pension Funds Adjudicator ShareCall: 0860 662 837 or phone: 012 346 1738 Email: enquiries@pfa.org.za www.pfa.org.za SHORT-TERM INSURANCE Ombudsman for Short-term Insurance ShareCall 0860 726 890 or phone: 011 726 8900 Email: info@osti.co.za www.osti.co.za

TAX Tax Ombud ShareCall: 0800 662 837 or phone: 012 431 9105 Email: complaints@taxombud.gov.za www.taxombud.gov.za PROFESSIONAL ORGANISATIONS Fiduciary Institute of Southern Africa (FISA) phone: 082 449 2569 Email: secretariat@fisa.net.za www.fisa.net.za Financial Planning Institute of South Africa (FPI) Phone: 011 470 6000 Email: info@fpi.co.za www.fpi.co.za South African Institute of Tax Professionals (SAIT) Phone: 012 941 0400 Email: info@thesait.org.za www.thesait.org.za

FINANCIAL DATA ◆◆ For the latest financial market indicators, go to https://www.iol.co.za/business-report/ market-indicators ◆◆ For the latest quarterly unit trust performance, go to https://www.iol.co.za/ personal-finance/collective-investments ◆◆ To look up performance of a particular unit trust fund go to https://www.iol.co.za/ personal-finance/fund-look-up