IOL Money Mag - November 2021 by Independent Media Digital Magazines

IOL

MONEY NOVEMBER 2021

HEALTH CARE AND MEDICAL COVER

CONTENTS FEATURES 5 Countries with the best health care

How medical schemes fared last year through the pandemic

Practical solutions to the vaccination problem

Small schemes merge with larger ones as industry consolidates

You should be more than a number to your medical scheme

REGULARS Rands and Sense with Tony Singleton

Fact File: Medical Schemes

Money Basics with Martin Hesse: What to consider when choosing medical scheme cover for 2022

Money Quiz 18 Planning Perspectives with Palesa Tlholoe

Important contacts and links

COVER PICTURE: Gino Crescoli / Pixabay

FROM THE EDITOR

You can be young without money, but you can’t be old without it. – TENNESSEE WILLIAMS

American playwright and screenwriter

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

PHYSICAL health and financial health tend to go hand in hand. People in low-income groups are generally more unhealthy than those in middle- and high-income groups for a number of reasons. They have a less varied diet, lower in healthy vegetables and higher in carbohydrates and unhealthy fats, putting them at higher risk of diabetes, heart disease and other conditions. Their environment may be unhealthy – for instance, they may be forced to share unhygienic ablution facilities. They may not have much leisure time, which can have an effect on mental health. And they simply cannot afford the health care that people in the upper income brackets can. The problem is that high-quality health care is expensive, and South Africa is particularly bad at providing a decent level of health care for its citizens (see article on pages 4 & 5). While the government moves slowly with its National Health Insurance programme, which at the moment appears unaffordable, South Africans have little alternative but to fork out for medical scheme cover, which, it seems to me, generally covers you for less and less as the years go on, while charging you more and more. It is still the best health cover available, because it is regulated by the Medical Schemes Act, which requires a certain minimum level of cover, and this includes hospitalisation for emergencies and for a relatively comprehensive list of life-threatening conditions.

Martin Hesse

COUNTRIES WITH THE BEST HEALTH CARE

The coronavirus pandemic has made us realise how important it is to have a strong healthcare system. Medical care can vary widely between countries, so which countries are graced with the best systems in the world? According to the World Health Organisation (WHO), a wellfunctioning healthcare system requires a steady financing mechanism, a properly-trained and adequately-paid workforce, well-maintained facilities, and access to reliable information on which to base decisions. The WHO’s last global report (2000) ranked these five countries in the top-10 countries with best health care in the world. [Sadly, South Africa rated among the worst countries for health care, at 175th out of 191.]

1. FRANCE

France has the best healthcare system in the world, according to the WHO study. Statutory health insurance was expanded to cover every citizen in 2000. Out-of-pocket payments are common for doctor’s appointments, but the government refunds most fees. France also scores well for health outcomes. Having some of the highest quality medical care in the world helps to keep deaths from cardiovascular disease low.

2. ITALY

Italy’s National Health Service was created in 1978. Healthcare is provided to all citizens and residents by a mixed public-private system. The public part is the national health service, Servizio Sanitario Nazionale (SSN), which is organised under the Ministry of Health and is administered on a regional basis. Family doctors are entirely paid by the SSN, must offer visiting time at least five days a week, and have a limit of 1 500 patients.

3. SINGAPORE

The WHO study gave Singapore the highest rank outside of Europe – it’s one of many countries in Asia with great healthcare. Singapore’s healthcare is prized for its efficiency and financed through a mixed system. MediShield Life is a form of statutory public health insurance designed to cover large bills. Out-ofpocket payments are common, but other systems help Singaporeans to pay for these.

4. OMAN

Omani citizens have free access to the country’s public health care. Generally, the standard of care in the public sector is high for a middle-income country. Oman now has a very low rate of disease of once common communicable diseases, such as measles and typhoid. The hospitals in Oman generally provide a high quality of health care. Most of the largest and most advanced hospitals and health centres are located in Muscat.

5. JAPAN

Coming in 10th place in the WHO study, Japan enjoys a high standard of healthcare that helps the country to achieve enviable life expectancy. The statutory health insurance system covers more than 98% of Japan’s population, while a separate system for those in poverty picks up the rest. The health insurance covers the vast majority of treatments, including mental health care, hospice care and most dental care.

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HOW MEDICAL SCHEMES FARED LAST YEAR THROUGH THE PANDEMIC

The Annual Report of the Council for Medical Schemes details the effects of the Covid-19 pandemic on claims experience as well as measures put in place to help struggling consumers. THE medical schemes industry processed Covid-19 claims to the value of R10.1 billion in 2020, according to the recently released Council for Medical Schemes (CMS) Annual Report for 2020/21. There were 422 894 members of medical schemes infected with Covid-19 in 2020, and out of that number, there were 383 585 recoveries, representing a mortality rate of 3.02%. These numbers are based on data from 73 schemes, representing 99.84% of medical scheme beneficiaries.

REGULATING DURING A PANDEMIC In various concessions to schemes, the CMS allowed for the use of personal medical savings accounts to offset contributions, the relaxation of credit policies, contribution holidays and lower future contribution increases. As a result, 19 914 members were granted contribution deferrals to the value of R586.9 million, while 16 654 members received relief through their personal medical savings accounts to the value of

R180.11 million. The CMS also extended a hand to small, medium and microsized enterprises (SMMEs) with less than 200 employees, allowing schemes to make payment arrangements with these businesses to protect their employees’ cover. This allowed 30 725 members to receive relief through rule amendments (the impact was R133.31 million). A further 5 447 members received other types of relief, such as debt policy relaxation to the value of R53.68 million.

7 MEDICAL SCHEMES INDUSTRY The number of medical schemes fell by two to 76 registered schemes, as a result of two mergers. These 76 schemes had a total subscription of 8.89 million beneficiaries in 2020, down from 8.99 million in 2019 – a year-on-year decrease of 1.15%. The average age of medical scheme beneficiaries in 2020 was 33.4 years compared with 33.04 years reported in 2019, with the average age of female beneficiaries at 34.5 years and that of males at 32.2 years. The pensioner ratio increased slightly to 8.9%, with increases in both males and females. HEALTHCARE UTILISATION AND EXPENDITURE The Covid-19 pandemic caused a decrease in healthcare utilisation and expenditure in 2020 due to the varying levels of lockdowns and cancellation of elective procedures and services. The decrease in screening activities during 2020 may also affect future costs, as early detection normally results in lower costs and better clinical outcomes in the long-term. ● Healthcare expenditure on benefits was R178.04 billion, 3.81% down from the 2019 reported amount of R185.1 billion. ● Hospital expenditure saw a

decline of 8.38% between 2019 and 2020, from R68.4 billion to R62.7 billion – over 92% of this expenditure went to private hospitals. The average amount paid per beneficiary for hospital services decreased by 8.45% to R7 052. ● There were also less doctor visits by consumers – the amount claimed by general practitioners (GPs) decreased by 10.07% from R10.3 billion in 2019 to R9.21 billion in 2020. Despite this, hospital visits by GPs saw a 15% increase in cost, with an average of R1 044.94 per event in 2019 compared with R1 203.43 in 2020, accounting for 14% of the total expenditure on GPs. Out-ofhospital visit costs increased from an average of R404.62 per person in 2019 to R424.59 in 2020. ● Caesarean sections increased by 7.30% from R651.83 million in 2019 to R699.40 million in 2020. ● Expenditure on medical specialists decreased by 2.2%, from R13.4 billion in 2019 to R13.1 billion in 2020. ● The average expenditure per event in hospital increased by 10.99% from R1 549.13 in 2019 to R1 719.41 in 2020. The average expenditure per event out of hospital increased by 4.28% from R1 185.57 in 2019 to R1 236.31 in 2020. ● Medicines and consumables

dispensed by pharmacists and providers other than hospitals amounted to about R29.43 billion, an increase of 3.73% on R28.3 billion in 2019. ● Overall, risk benefits paid per beneficiary decreased slightly by 4.31% from R18 791 in 2019 to R17 980 in 2020, and the average spent from medical savings accounts per person increased by 0.04% to R2 029.63. ● PMB expenditure (risk and savings expenditure) amounted to R92.4 billion in 2020. As a percentage of total benefits paid, PMB expenditure accounted for 51.9% in 2020, up from 51.2 % in 2019. NON-HEALTHCARE EXPENDITURE Gross non-healthcare expenditure for all medical schemes at the end of 2020 was R17.14 billion, an increase of 3.55%, from R16.55 billion in 2019. Administration expenditure grew by 3.67% to R14.35 billion, from R13.84 billion in 2019. Administration expenditure is the biggest component of NHE (83.73%), followed by broker fees and other distribution costs (14.81%) and impaired receivables (1.46%). (For more facts and figures on medical schemes’ non-healthcare expenditure see Fact File on page 11.) SURPLUS AND RESERVES The net healthcare result for all medical schemes combined reflected a surplus of R19.93 billion in 2020 (2019: R1.03 billion surplus). The improved performance was because of the lower utilisation of benefits during the pandemic. The 2020 industry solvency ratio stands at 44.55% (2019: 35.61%), well above the minimum required ratio of 25%. Supplied by the CMS

PRACTICAL SOLUTIONS TO THE VACCINATION PROBLEM Vaccinologist points the way to victory over Covid-19 WE all know what we need to do: get vaccinated. This was the message from Phumelele Makatini, chief executive and principal officer of the Building and Construction Industry Medical Aid Fund, in conversation with epidemiologist and vaccinologist Professor Charles Shey Wiysonge on the second episode of her online show Tea with Phumi. “There are a lot of myths around vaccines as a whole, but I think there is more hesitancy around Covid-19 vaccinations than vaccinations in general,” said Professor Wiysonge. “During the Covid-19 pandemic, we have heard more about vaccinations in the public domain than at any time before. The barriers to Covid-

19 vaccination uptake range from supply and availability to psychosocial factors. Even in one country, we might find that there is more of a certain challenge in one region than in the rest of the country. Challenges cover a wide range and may vary as time goes on. We may find that when the challenges of availability and access are solved, we are confronted by psychosocial factors.” Wiysonge says we have a long way to go, but we also need to celebrate what we have achieved. “In the beginning we had quite a problem with access, supply and availability. Now we have a steady supply and more vaccination sites have been opened. Now people from the community need to

come,” he says. He told Makatini that there is a different solution to each barrier, as there is no onesize-fits-all solution. For example, when South Africa had supply and availability problems, it was up to our government to negotiate and sign contracts with vaccine manufacturers directly, to obtain vaccines through the African Union, or to obtain them through the Covax facility. We have passed that stage, and now have enough vaccines available in the country. However, in terms of access, there are parts of the country where people may have to travel long distances to get to vaccination sites, which can for many be prohibitive. Vaccination therefore needs to be brought to the people.

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Having vaccination sites close to where people are situated is vital. Bringing vaccines to the people Wiysonge believes the most immediate solution to barriers is innovative thinking. “This includes vaccination sites at places such as taxi ranks, or grant queues for the aged. I think the government and the private sector are doing a lot to bring vaccinations to the people, but we need to do more to ensure that people don’t have to travel long distances to get their jabs. We also need to have more vaccination stations open on weekends.” He says we also need to consider more convenient hours and look into the possibility of vaccination options such as trains or long-distance buses. “Why not extend vaccination hours into the evenings so that people who can’t do it during the day, can have their jabs after hours?”

Wiysonge agrees that vaccine hesitancy is a real problem. “When the vaccinations are as accessible as possible, people need to accept the value of this treatment. We need to be able to give the right information. We know that there has been a lot of misinformation. We know there are myths around vaccines. People also keep changing the goal posts. When you clarify one concern, they bring up another one,” he says. But according to him, we need to understand the hesitancy, listen very carefully to what the concerns are and provide adequate responses in the form of solutions and accurate information. “I’m sure if we do that, the majority of people will accept the vaccine.” The repercussions of failing to overcome vaccination barriers are severe, says Wiysonge. On the individual level, vaccinations protect

the vaccinated person, but if we can vaccinate sufficient numbers, we can stop the transmission of infections. This is what we often refer to as herd immunity. “For that we need to have a very high vaccination percentage. At first, we used to talk about 67%, but of course knowing that not everybody in the country is eligible for vaccination, we need very, very high coverage in the adult population – maybe 90%, even 95%. In that way we may reduce or even stop the transmissions. There would be protection at the individual level, but also at community level. “For this to happen, people need to have the right information and we all have to play our part to make sure that people are literate about vaccinations,” Wiysonge says. To view the video Click here

SMALL SCHEMES MERGE WITH LARGER ONES AS INDUSTRY CONSOLIDATES The medical scheme industry is changing as it faces an array of challenges, and smaller schemes are likely to feel the pressure, forcing them into amalgamations. ESCALATING healthcare inflation and costs, a declining and ageing membership, the impact of a global pandemic and a growing disease burden is impacting the medical scheme industry. One of the notable trends is towards medical scheme consolidation, especially in light of the proposed introduction of National Health Insurance (NHI), where smaller schemes will be unable to compete. The Council for Medical Schemes (CMS) recommends that schemes that cannot compete on a sustainable price point should

consider amalgamation partners. “The trend towards amalgamations is not only for the sustainability of the medical scheme but for the benefit of members who ‘own’ the fund,” says Lee Callakoppen, principal officer of Bonitas Medical Fund. “It is not only the call from CMS for schemes to join forces but also strict regulations around minimum solvency ratios and reserves ,which are more difficult for smaller schemes to maintain.” The Medical Schemes Act requires that a medical scheme “shall at all times maintain its

business in a financially sound condition”. This means having sufficient assets for conducting its business, providing for liabilities and having the prescribed solvency requirements of 25%. The objective of the solvency requirement is to maintain financial stability, promote fair competition, ensure efficient use of capital and, more importantly, to provide early warning signs of potential failure. The CMS is the statutory body that provides regulatory supervision of more than 80 medical schemes registered in the country and oversees

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11 amalgamations. One proviso for amalgamation is that schemes should complement each other and provide a broader and more comprehensive offering to members. “One clear indicator of risk is the size of the pool of lives being covered,” says Callakoppen. “Schemes with smaller risk pools are struggling to survive and are experiencing more volatile claims. Amalgamation into a bigger scheme means cross-subsidisation of costs. “It is a trend I believe will continue, if not accelerate. In fact, in the past decade we have seen 28 amalgamations approved by the CMS and the Competition Commission.” Callakoppen says Bonitas is waiting for the approval of the Competition Commission regarding

its proposed amalgamation with Nedgroup Medical Aid Scheme after both sets of members voted in favour of the transaction. “If approved there is a potential of an increased membership of around 370 000 principal members, a decrease in average age and pensioner ratio, as well as an improvement in reserve levels. “The reality is that current economic conditions are putting pressure on consumers, already burdened by the high-cost of living. “Healthcare costs are rising exponentially, and whether NHI is implemented in the near future or not, all companies providing healthcare or associated services will need to be proactive in addressing this issue,’ he says. “Amalgamation with larger schemes will mean stronger

HEMES NUMBER OF SC EAR Y HALVES IN A ical schemes The number of med 2000 to 76 in 4 in decreased from 14 2020/21 Annual the 2020, according to for Medical Schemes. il nc ou Report of the C ive mations mainly dr Voluntary amalga idation of medical nsol the trend in the co l rt said. The overal schemes, the repo in 2020 was 76, number of schemes en schemes and consisting of 18 op hemes. 58 restricted sc

financial stability, a broader national footprint and better economies of scale to allow schemes to negotiate more advantageous rates and improve provider networks. This translates into more value for members.’ From an investment of assets perspective, there is an opportunity for more effective management of asset allocation and diversification, potentially resulting in lower fees, higher service levels and better returns over the long term. “There is no doubt that the future of healthcare is changing,” says Callakoppen, “and it is up to healthcare providers and associated services to be nimble enough to pre-empt these changes and adapt accordingly.” Supplied

Rands & Sense

When your heart needs help, gap cover can save your pocket

Tony Singleton

HEART disease is one of the leading causes of death in our country. While heart problems are covered as prescribed minimum benefits (PMBs), the voluntary use of a non-designated service provider can result in a shortfall, and these are often sizable. There are many different types of heart disease, which require different treatment and have different risks and outcomes. Congenital heart disease is something children are born with and nothing can be done to prevent it. But, while some risk factors are out of our control, including age, sex, genetics and family history or heart disease, the vast majority of heart diseases and strokes (up to 80%) can be prevented. It is essential to control risk factors around lifestyle, such as stress, smoking, nutrition, body weight, cholesterol and blood pressure, and by managing other diseases such as diabetes. Screening and monitoring these factors can help to identify problems early on, such as high cholesterol, so that they can be addressed before they can cause severe disease. Don’t let heart disease ruin you Most heart conditions are PMBs, which means that, if you make use of a designated service provider (DSP) to obtain treatment, it will be fully covered by your medical scheme. The exception is if there is a life-threatening emergency where you could not select a DSP, in which case the claim will be funded in full until you are stabilised. You will then need to be moved to a DSP if you want the medical scheme to continue to fully fund the treatment. If a DSP is not used, you will be subject to medical expense shortfalls. However, while heart diseases are typically PMBs, there are certain elements of treatment that may be subject to sub-limits. For example, the stents used to open blocked coronary arteries are considered to be prosthesis, as are

pacemakers, which means medical schemes may only fund a portion of the cost. There may also be shortfalls with regard to doctors and surgeons, which can be extremely costly. For example, we saw a claim in February for a cardiothoracic surgeon, for the treatment of acute ischaemic heart disease, that was charged at R141 862. The medical scheme paid R51 681, leaving a shortfall of R90 18, which would have fallen to the member to pay, had they not had gap cover. Another claim from October 2020 for unstable angina and atherosclerotic heart disease saw a member experience a shortfall of R71 383 for the cardiothoracic surgeon, R22 500 for the anaesthetist and R16 277 for the cardiologist, a total shortfall of R110 160. Beyond the emergency Heart disease, apart from often resulting in expensive emergency surgical procedures, also requires long-term management with medication. Members also need to ensure they register chronic conditions, including high cholesterol and blood pressure, to make sure these are covered. The basket of care for PMB conditions like heart disease includes diagnosis, the medication required for maintenance, as well as consultation and blood tests needed to confirm that the disease is being well regulated. However, prevention is always better (and less costly) than cure. To truly safeguard heart health, and financial wellbeing, we need to ensure we control all of the risk factors we can. This includes not smoking, minimising stress, eating a healthy diet, and getting enough exercise. Heart disease is a leading killer across the globe, and in South Africa as well, but most of the time it can be prevented. Tony Singleton is the chief executive of Turnberry, a gap cover provider.

FACT FILE

The 2020 annual report of the Council for Medical Schemes lists the schemes that have high administration and governance costs. The higher these costs, the less a scheme has for covering the healthcare needs of its members and the higher the contribution rates. OPEN SCHEMES WITH HIGHEST ADMINISTRATION COSTS (above average of R165.11 per beneficiary per month) Administration Expenditure Scheme

Administrator

Agility Health

Health Squared Compcare Wellness Suremed Health Keyhealth Fedhealth Sizwe Momentum Hosmed Discovery Health

Universal Healthcare Administrators Momentum Thebe ya Bophelo PPS Healthcare Administrators Medscheme Holdings 3Sixty Health Momentum Health Solutions Medscheme Holdings Discovery Health

No. of beneficiaries

R’000

Per beneficiary per month

% of gross contribution income

32 610 33 348 2 096 67 709 148 189 11 802 293 884 54 253 2 764 994

101 702 93 225 5 547 172 447 358 773 251 500 629 288 112 453 5 566 42

259.89 232.96 220.54 212.24 201.75 185.80 178.44 172.73 167.76

9.81% 10.54% 10.13% 7.64% 9.68% 9.47% 11.64% 7.84% 7.47%

10 SCHEMES WITH THE HIGHEST TRUSTEE FEES Medical scheme

Type

Total trustee fees

No. of trustees

Average fee per trustee

Government Employees Medical Scheme Restricted 8 322 000 12 694 000 Discovery Health Open 8 028 000 7 1 147 000 Hosmed Open 7 084 000 10 708 000 SAPS Medical Scheme (Polmed) Restricted 6 577 000 17 387 000 Bonitas Open 5 635 000 10 564 000 Fedhealth Open 5 314 000 14 380 000 Medshield Open 4 317 000 12 360 000 Profmed Restricted 3 805 000 9 423 000 Sizwe Open 3 768 000 12 314 000 Compcare Wellness Open 3 416 000 10 342 000

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What to consider when choosing medical scheme cover for 2022

MONEY BASICS

with MARTIN HESSE

THIS is the time of year when medical schemes typically have their window period for members to switch plans (known in the industry as “options”) if they want to, either by upgrading to a more expensive option that offers more benefits, or by downgrading to a cheaper one that provides a lower level of cover. The window period differs among medical schemes, but most will give you until the middle of December or to the end of the year to change options. Your scheme will probably by now have issued new brochures detailing all the details of benefits and contributions for next year on each option in their range. It may be laborious, but it is worth going through these thoroughly, checking any changes in benefits on your current option,

as well as comparing options if you want to change. Schemes with better websites have handy tools for comparing options. To get the best value for money, you need to compare option contributions and benefits against what you paid this year, both in contributions and out of your own pocket, weighing up whether to contribute more by switching to a higher option (and pay less out of your own pocket), or to contribute less by switching to a lower option (and self-fund a higher proportion of your expenses). You can also look at ways to save, such as switching to one of the increasingly popular network options whereby you are restricted to the use of healthcare providers on the scheme’s network. Here are some of the things you

should consider when assessing your medical cover for next year: Benefit limits Your option will have an overall benefit limit for the year as well as subcategories with their own annual limits. Check on the changes to these limits compared with last year. Limits on cancer treatment (oncology), in particular, should be noted. Prescribed minimum benefits (PMBs) Your scheme may appoint one or more designated service providers (DSPs) for the diagnosis, treatment and care of PMB conditions, and a list of these providers should be available. If you choose not to use the DSP, the scheme may charge a co-payment.

15 Medicines A scheme may have a list of medicines (available for your perusal), known as a formulary, for which it will pay in full. If you voluntarily use a medicine that is not on the list, the medicine may not be covered, or the scheme may impose a co-payment. In-hospital rates Check the rate at which your option pays doctors who treat you in hospital - for example, this may be 200% of the scheme’s rate. Check that this rate has not been reduced. Gap cover can bridge this payment gap. Network options Some options offer benefits through

a network of healthcare providers. These save you money in two ways: the contributions are lower and you are not subjected to co-payments if you use the providers in the network. If you are considering such an option, check on your scheme’s network of providers, taking into account their proximity to where you live, and the expected quality of care or treatment. Managed care Schemes may have managed-care programmes for treating certain PMBs and chronic conditions, such as diabetes. These should be well explained in your option brochure so that you know the correct procedures to follow.

Medical savings account The money that accrues to a medical savings account, if your option carries one, is yours, and the scheme should allow some flexibility in how it is spent. You typically have access to the full amount for the year up front. Above-threshold benefits This feature of pricier options covers your day-to-day costs once you have depleted your medical savings account. But there is typically a “self-payment gap” between the savings account and the threshold. If this is too wide, the benefit may be of little value.

MEDICAL SCHEMES vs HEALTH INSURANCE Short-term health insurance products may seem an attractive alternative to medical scheme cover. But, if you are cashstrapped, be extremely cautious before replacing your medical scheme cover with a short-term product. Medical scheme cover The Medical Schemes Act makes it mandatory for medical schemes to accept all applicants, and a scheme cannot refuse a person who wants to join. It can, however, impose a three-month general waiting period, a 12-month preexisting condition exclusion and, in some cases, a late-joiner penalty for new members. Medical schemes must charge all members on a given plan the same premium and cannot adjust the rate based on risk factors such as age, medical history, lifestyle factors or health status. Medical schemes are required by law to provide all their members with a minimum level of

mandatory cover, the prescribed minimum benefits (PMBs), which covers treatment for 26 of the most commonly occurring chronic illnesses and over 270 other conditions. Health insurance This is cover provided by shortterm 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. While these products have become more sophisticated in recent years, they remain a poor substitute for medical scheme cover. New regulations governing these products require that they operate under similar underlying principles as medical schemes in that underwriting must not discriminate according to health or age. However, like medical schemes, they may impose a waiting period on your policy, meaning you can’t claim within that period. Some insurers are now entering the group risk market, where this type of cover is provided as a group benefit to employees instead of medical scheme cover. Under this type of cover, older and sicker employees are subsidised by younger, healthier employees. is important to know exactly what you will be covered for, as it is still likely to be inferior to medical scheme cover.

YOU SHOULD BE MORE THAN A NUMBER TO YOUR MEDICAL SCHEME A medical scheme “should show up for you and your family by understanding the people behind the purchases”. THE final quarter of 2021 is underway and families are turning their thoughts to what matters most as they begin to make plans for the year ahead, with conversations around health remaining prominent. “As the SA economy struggles to get up from its knees, the wise private healthcare consumer is looking for healthcare cover that is not only affordable, but will also provide benefits that align to the health goals of his or her family,” says Josua Joubert, chief executive and principal officer of CompCare Medical Scheme. Joubert says that, as any astute healthcare adviser will attest, pricepoint is a key driver in the decision making process. “Important to consider is the scheme’s average weighted contribution increase for 2022, and a scheme that has managed to keep increases to a level below that of the pre-Covid era clearly understands the financial position of consumers. “At the same time, reliability is paramount, and maintaining

a good solvency ratio places a scheme in a league of its own when it comes to a stable and predictable financial future,” he says. So, with the basics covered, what kind of value are people looking for? FAMILY FIRST “As a family man I can relate to the need to provide the best possible groundings for one’s children, no matter the challenges faced. Many medical scheme members will start here, and they are right to do so. “For example, a scheme that provides kids with a nutritional assessment and a healthy eating plan specially developed for children, is a partner in health worth seeking out. Likewise, a consultation with an occupational therapist, a fitness assessment and an exercise prescription programme for your children can set them on a path of lifelong physical fitness,” notes Joubert. “And while some parents may not think it particularly important just yet, cover that includes the HPV vaccine for young girls provides the

option of added protection from cervical cancer in later years of their life – a priceless gift.” Joubert points out that many parents, especially young families who are starting out, need all the support they can get, particularly in times of economic difficulty. He says a medical scheme that provides the most important healthcare benefits with extras that add tangible value across a variety of benefit options at a price that realistically suits member budgets, is a scheme that has the member’s best interests at heart. “Naturally, every young family will want cover for those building blocks in the early years – baby wellness visits and childhood immunisations, preschool eye, hearing and dental screenings as well as a school readiness assessment. “With little ones under the age of six who are starting out at preschool, exploring a wider world and building their immune systems, it can be a lifesaver to have unlimited cover for GP visits and basic dentistry, as well as an

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extra annual visit to the emergency room,” he says.

day-to-day or savings benefits,” he says.

PREVENTATIVE BENEFITS According to Joubert, when it comes to employer groups seeking to protect and maintain the good health of their employees and their loved ones, the value of preventative care truly comes into its own. “A scheme that encourages members at every level to use their preventative benefits and take control of their health must also ensure that costs are not a barrier for anyone when it comes to safeguarding the future of their health in this way. It therefore goes a long way if these benefits are paid from risk and do not affect

COVER FOR INJURIES Being active should, by the same token, allow a real sense of choice with a reliable medical scheme that not only provides access to outstanding wellness benefits but also cover injuries from adventure sports, Joubert says. “Not all schemes can offer this level of freedom but those that do, afford members the option to pursue their wellness goals in their own way. ONCOLOGY “It almost goes without saying that members want to know that their medical scheme has their back with

an unlimited oncology benefit for total support, if ever they are in a position where this benefit needs to be activated.” MENTAL ILLNESS “Finally, being a pillar that supports a company or family, and sometimes both, can take its mental toll – especially in difficult times. Having access to a 24/7, unlimited professional telephonic emotional health and wellbeing support line, with referrals for oneon-one counselling when needed, can be the stabilising force we all sometimes need,” Joubert says. Supplied by CompCare Medical Scheme

Money Quiz

Test yourself on your financial knowledge 1. Which of these asset classes typically provides the lowest return over the long term (more than 10 years)? a) Cash b) Shares c) Property d) Bonds 2. Which of these vehicles is tax-incentivised for retirement savings? a) Unit trust fund b) Pension fund c) Private equity fund d) Hedge fund 3. What is the (withholding) tax rate on local share dividends? a) 10% b) 15% c) 20% d) 25% 4. What is the sale value of a property below which you don’t pay transfer duty? a) R500 000 b) R1 000 000 c) R1 500 000 d) R2 000 000 5. Which is the biggest open medical scheme in South Africa? a) Momentum b) Fedhealth c) Bonitas d) Discovery Health 6. What is the minimum solvency ratio medical schemes in South Africa must maintain? a) 15% b) 20% c) 25% d) 40%

7. Which body regulates medical schemes in South Africa? a) Department of Health b) Board of Healthcare Funders c) Council for Medical Schemes d) Health Professions Council of SA 8. Scenario: your medical scheme option funds specialists treating you in hospital at 200% of its nominated rate for a particular procedure. You use a specialist who charges R4 500, while the scheme’s nominated rate is R1 500. How much will you have to pay from your own pocket? a) 0 b) R1 500 c) R3 000 d) R4 500 9. Bitcoin recently broke through a significant value in rand terms. What was it? a) R1 000 000 b) R500 000 c) R100 000 d) R10 000 10. The FTSE/JSE All-Share Index lies in which range currently (November 2021)? a) 30 000 - 40 000 b) 40 000 - 50 000 c) 50 000 - 60 000 d) 60 000 - 70 000

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

Planning Perspectives

How to optimise your medical aid cover

Palesa Tlholoe

19 FOR many families, medical aid is one of the biggest monthly expenses. Premium inflation is on the rise, too: we are paying more and more for the same benefits. Despite all this, members still run out of funds in the middle of the year and have to pay out of pocket for medical services. This leaves a bitter taste in the mouth – so much so that it’s tempting to scrap medical aid altogether. But this would be a mistake. Firstly, because medical aid is crucial in South Africa, where our national healthcare system has challenges; and secondly, because a medical emergency can end up costing you a lot more than you think. As you plan for next year, here are some practical ways to streamline your medical aid so that you get the right cover, and you don’t pay more than you need to. Understanding risk It’s worth taking a moment to understand how medical aid works. Essentially, it’s a form of risk cover – similar to your car insurance (it is not an investment). Your monthly contribution goes into a pool to be shared by all paying members, on the premise that some members need more benefits and some need less, even though you pay the same amount. Those who need more are therefore subsidised by those who need less. For example, if you have a car accident three months after joining a medical aid, and you end up in hospital with a bill amounting to hundreds of thousands of rands, your scheme will pay even though you only contributed less than R10 000 in premiums. It is for this reason that there are protocols and limits in place when it comes to paying for medical expenses. If left unmanaged, the entire medical scheme might collapse during a crisis, such as now during the pandemic. Practical tips Okay, you understand the concept.

To make the most of your cover, take note of these points: ● Know your benefits. Be clear on the benefits that your scheme provides. Know which category of claims may result in co-payments, and by how much your medical savings account will be credited each year. ● Use doctors on the network. Each medical aid scheme has a network of doctors and other medical professionals. If you use the doctors on the network, fees are charged at scheme rates and are often settled directly by the medical aid. Be aware that some doctors, usually specialists, are not contracted into any medical scheme. Ask the practice before you consult, because you might get a nasty surprise. Some specialists charge 300% or more of the scheme rate, and you will only be refunded a portion. ● Don’t neglect your emergency fund. Always keep an emergency fund separate from your medical aid for any additional and unexpected medical expense that your medical aid might not cover. The money in this fund should be easy to access at short notice. ● Consider gap cover. Gap cover is extra insurance for medical expenses not covered by your scheme (see Rands and Sense on page 10). ● Dread disease cover. Severe illness or “dread disease” cover is a separate form of insurance offered by life insurance companies. It pays out on diagnosis of certain prescribed conditions. You don’t have to be bedridden or out of work for the benefit to pay out, and you can certainly use the proceeds to top up your medical and non-medical costs. ● Get advice. It pays to consult with a Certified Financial Planner (CFP) who has experience in medical cover. Visit the FPI website to find a CFP professional near you. Palesa Tlholoe, CFP, is Co-Founder and Wealth Manager at Imvelo Wealth

INFORMATION

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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 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

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 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 or information@medicalschemes.com www.medicalschemes.com

CREDIT OMBUD MaxiCall: 0861 662 837 or phone: 011 781 6431 Email: ombud@creditombud.org.za www.creditombud.org.za

RETIREMENT FUNDS Pension Funds Adjudicator ShareCall: 0860 662 837 or phone: 012 346 1738 Email: enquiries@pfa.org.za www.pfa.org.za

NATIONAL CREDIT REGULATOR ShareCall: 0860 627 627 or phone: 011 554 2600 Email: complaints@ncr.org.za or (debt counselling) dccomplaints@ncr.org.za www.ncr.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/businessreport/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

IOL Money Mag - November 2021

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