Money Basics with Martin Hesse

What to consider when choosing medical scheme cover for 2022

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.

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 short term 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.