BD Insights Medical Cover Options 2024 (Oct 19 2023)

BusinessDay www.businessday.co.za Thursday 19 October 2023

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INSIGHTS

MEDICAL COVER OPTIONS FOR 2024 Sponsored content

How do medical aids determine increases?

Tariffs are •priced based on the concept of risk pooling, writes Lynette Dicey o ensure medical aid membership remains affordable, the Council for Medical Schemes, the regulatory body for medical schemes, advised medical schemes to keep their 2024 contribution increases to as close to the inflation rate as possible. It is estimated that the inflation rate for 2024 will be 5%.

Few schemes, however, have taken the advice of the CMA with the majority announcing significantly higher increases.

Alexforbes Medical Aid Insights report explains that medical schemes are priced based on the concept of risk

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pooling, where the risk contribution charged to members depends on a combination of the expected medical expenses of the entire membership group (referred to as claims), the expected costs associated with any administration of claims and day-to-day operations (referred to as non-healthcare expenses) and the interest or returns expected from the scheme’s assets (referred to as

investment income).

“Where the scheme’s claims and expenses exceed the contributions, investment is required to subsidise this shortfall. Any remaining investment income is then added to the reserves of the scheme and is used to maintain its solvency level,” says the report.

The problem comes in when the investment income does not cover the shortfall. In this case,

the scheme will be forced to dip into its reserves which, in turn, erodes its solvency levels.

A medical scheme’s solvency ratio is the level of reserves or accumulated funds that it needs to hold as a percentage of gross annualised contributions. The solvency ratio is regulated by the Medical Schemes Act which requires that each scheme maintains a minimum solvency ratio of 25%.

During 2020, most schemes increased their solvency ratio as a result of less claims during the Covid-19 pandemic.

Average solvency levels for open schemes increased from 38.7% in 2020 to 39.6% in 2021 while restricted schemes increased their solvency levels from 52.5% in 2020 to 56.2% in 2021, says the Alexforbes report.

Schemes that don’t meet the statutory minimum solvency level of 25% are required to submit a business plan to the CMS outlining their strategy to achieve this ratio.

A scheme’s failure to maintain the required solvency

Deciding on the right plan depends on personal needs Membership of a medical scheme is the only way most people can afford private health care.

Even then, co-payments, sub-limits and medical expense shortfalls have become increasingly common, leaving people out of pocket even when they do have medical aid.

That’s where gap cover steps in, becoming an increasingly more essential part of a comprehensive healthcare portfolio, but selecting the right product can be daunting. When it comes to choosing medical aid as well as gap cover to suit your needs, your life stage and your budget, the right advice is critical, says James White, director of sales and marketing at Turnberry, a registered financial services provider which specialises in, among others, accident and health insurance cover.

“Selecting a medical aid scheme and plan option is a personal exercise, as there are many different offerings available from multiple providers and everyone’s circumstances are unique,” says White. “The right plan depends on your individual

James White … circumstances. circumstances, such as your age and your life stage, as well as your own health. It also depends on affordability and budget factors, as the cost of medical aid can be a significant expense. It’s also important to consider any limitations, additional expenses, exclusions or waiting periods that could apply, which again depends on personal circumstances.”

He explains that a single, healthy 26-year-old with no children will have very different needs from someone in their mid-fifties with a chronic condition such as blood

pressure or diabetes. For the former, a basic hospital plan might be sufficient, while the latter individual will need a more comprehensive solution.

At the same time, a 26-year-old who is planning to start a family or who has children will also have different requirements from their medical aid.

White reveals that there are essentially three core components of gap cover, with the most important one typically being hospital expense medical shortfall cover, as this is where most out-of-pocket expenses originate. The other two essential components are co-payments and sub-limits.

Once again, he says, it’s important to also look at exclusions, limitations and waiting periods imposed by the gap cover provider.

“Once a medical scheme option has been selected, the ‘holes’ in your cover can be plugged with an affordable gap cover policy that will supplement the medical aid option you have chosen in terms of these three areas. If your chosen medical aid option includes large co-payments then it’s critical for your chosen

gap cover to have substantial co-payment cover, for example.

All medical aid schemes and options differ when it comes to these elements, so find a gap policy that fits well to supplement your cover.”

There is a range of valueadded extras that gap cover providers may offer, including a casualty benefit to cover the expenses of a visit to the emergency room, counselling benefits and premium waivers.

EXPERT ADVICE “The reality is that there is no single solution that will meet everyone’s circumstances, lifestyle, life stage, age, budget and other needs,” says White.

“Everyone is different, and to effectively protect your financial future it’s essential to get the right fit. Expert advice can go a long way in making sure you have the best medical aid cover you can afford — and the services of a broker are included as part of medical schemes, so there are no additional fees for making use of this service. Your broker can also help you to find the most appropriate gap cover to fit your unique individual needs.”

level can have devastating consequences. In 2022, Health Squared Medical Scheme abruptly announced it would be ceasing operations and going into voluntary liquidation, leaving 23,000 beneficiaries without medical aid membership. It later emerged that the scheme had never met its 25% solvency ratio.

During the Covid-19 pandemic, many schemes imposed lower than normal contribution increases. Those that had levels of reserves in excess of statutory requirements used this excess to subsidise claims. However, as the Alexforbes report points out, this practice is not sustainable in the long term as, over time, the scheme would become underpriced and would eventually need to adjust its pricing with large contribution increases in the future in avoid its solvency levels deteriorating.

Another trend observed during the pandemic was the implementation of contribution increases later in the year.

However, the Council for Medical Schemes has announced that schemes will no longer be allowed to defer contribution increases beyond January unless in exceptional circumstances, citing consumer confusion and the fact that it makes it difficult for consumers to compare competitive medical scheme offerings.

Regulations require that when a medical scheme increases its contributions, it needs to increase its solvency level by the same proportion. In 2021, more than half of the schemes included in the Alexforbes analysis did not have sufficient contribution income to cover both their claims and non-healthcare expenses in full, with the result that they used their investment incomes and, in some cases, their reserves.

In recent years there has been debate around just how appropriate the 25% solvency framework is, particularly given the fact that schemes that show membership growth are penalised from a solvency

perspective while those that lose members are essentially “rewarded” with less onerous solvency requirements.

The CMS conducted research on various risk-based solvency frameworks and presented their findings and a

HEALTHCARE INFLATION IS TYPICALLY ABOUT 2% TO 3% HIGHER THAN CONSUMER PRICE INFLATION proposed framework as far back as 2016. It says that any transition to a risk-based approach needs to ensure the competitive environment between schemes remains unchanged and is fair to all schemes, both large and small.

The CMS has also conceded schemes need to be able to use member funds efficiently to provide beneficiaries with the

greatest benefit including placing excess funds elsewhere to, for example, lower the cost of health care, implement better risk management, invest reserves to help limit contribution increases and provide richer benefits for members.

Healthcare inflation is typically about 2% to 3% higher than consumer price inflation.

This is due to a number of factors including rapid increases in healthcare provider costs; a rising burden of disease; increased hospital admission rates; medical aid members making more use of their benefits; expensive new medical technologies; and fraud, waste and abuse.

The Alexforbes report reveals that over the past 22 years CPI inflation has averaged 5.5% compared to medical care and health expenses inflation which has averaged 6.9% per year. Medical scheme contribution inflation has averaged at 7.3% per year in the same period.

Members urged to take advantage of preventative screening cover The World Health Organisation (WHO) says diagnosing and treating diseases such as cancer earlier improves the chances of survival.

However, diagnosing cancer in late stages condemns many people to unnecessary suffering and early death.

The WHO’s findings correlate with that of the Cancer Association of SA which says the top five cancers found in men — prostrate, colorectal, lung, non-Hodgkin’s lymphoma and melanoma — and the top five cancers found in women — breast, cervix, colorectal, uterus and non-Hodgkin’s lymphoma — can all be prevented through early detection and that the earlier they are detected the easier they are to treat.

Recent years, however, have seen a decline in take-up of preventative screenings, wellness checks and health risk assessments. That decline comes at a cost to medical schemes with chronic illnesses and conditions often only diagnosed at a late stage.

Gary Feldman, executive head of Healthcare Consulting at advisory and intermediary services firm NMG Benefits, says several medical schemes

Gary Feldman … be proactive. in SA have been looking at the research and doing the maths and, as a result, have expanded their screening benefits, most notably for cancer and heart disease.

Feldman advises medical scheme members to take the time to understand the preventative screening benefits their scheme offers its members — and to take advantage of them. “If you rely on public health, you can get these screenings done at a local clinic or pharmacy. Set a regular date every year to go for all the important screenings so

that you remember to keep on checking the status of your health,” he says.

Discovery Health Medical Scheme launched its WELLTH Fund earlier this year with the aim of driving preventative care.

The fund provides Discovery Health Medical Scheme members with access to additional screenings and preventative benefits.

The fund allows members on all plans to have a once-off access of up to R10,000 per family for an expanded range of screening and preventative health care.

Feldman explains that the original Discovery Vitality Health Checks includes a set of essential health screenings and preventative tests including blood pressure, glucose, cholesterol and body mass index, as well as a nonsmoker declaration. The WELLTH Fund’s expanded range of screening and preventative health care has six broader categories including general health, physical health, mental health, women’s and men’s specific health, children’s specific health, as well as medical monitoring devices for condition management.

“Members who regularly go for their screenings will detect conditions proactively, instead of reactively, which means that conditions are diagnosed before or in the early stages of development. Later stage development typically means more extensive treatment, resulting in higher costs for the patient as well as the medical aid,” says Feldman.

MENTAL HEALTH COVER Medical schemes have also taken note of the higher prevalence of mental health illnesses and many are offering more cover for mental health conditions. Lee Callakoppen, principal officer of Bonitas, reveals that the scheme has seen a 25% increase in the number of mental health hospital admissions, indicating a need for additional support. He says this need is particularly high in the 18 to 44 age group.

“Mental health conditions are exacerbated by factors such as an increased economic burden and increased psycho-social challenges such as loadshedding. We’ve also noted that mental health has been a key driver for absenteeism in corporate groups.”

Reward for healthy living Momentum Medical Scheme has announced an average contribution increase of 9.6% for 2024, pending approval from the Council for Medical Schemes, which is a standard industry practice.

Damian McHugh, executive at Momentum Health Solutions, concedes that while the increase may seem high, it was necessary to ensure the scheme’s future sustainability in light of higher utilisation of healthcare services post the pandemic, the high cost of medical technology, healthcare costs rising faster than the consumer price index and the fact that its membership — like that of all schemes — is ageing.

“Ideally, we need our economy to be growing and more people to be covered by medical aid schemes in order to access private healthcare services. This would alleviate pressure on the overburdened public healthcare sector and have a knock-on effect of ensuring a healthier population,” he says.

And if the medical scheme industry was able to grow its membership base, particularly with younger members, the cost of medical scheme

Damian McHugh … benefits. membership would decrease.

“It’s a global phenomenon that the older you get the more you utilise healthcare services, so schemes ideally want to be growing their base with new, younger members,” he explains.

McHugh advises against downgrading or opting out of medical scheme membership.

“There is no escaping the fact that health care is expensive. SA has private healthcare services that are among the best in the world, but it is typically only members of medical schemes who can afford to access private health care.”

In an effort to make medical

scheme membership more affordable, Momentum Health Solutions offers HealthSaver and HealthReturns. HealthSaver is a savings account that works seamlessly with a member’s medical aid, while HealthReturns is an incentive programme that rewards members for taking ownership of their health. Members can earn up to R1,500 per adult dependant simply by taking ownership of their health, including by going for an annual health assessment, complying with treatment protocols where applicable and staying physically active. All Momentum Medical Scheme members can earn HealthReturns, with the exception of the Ingwe Option.

“Our aim is to ensure members don’t need to downgrade or opt out but can rather earn money back by living a healthy lifestyle.

Ultimately, it’s about getting more benefits, but paying less,” says McHugh.

Health insurance products, he warns, are not the same as medical scheme membership and do not cover as much. “It’s not ideal, but it’s better than having no cover at all,” he says.

BusinessDay www.businessday.co.za Thursday 19 October 2023

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INSIGHTS: MEDICAL COVER OPTIONS FOR 2024

Bonitas balances price hikes with value and sustainability at •theNetworks most favourable tariffs ensure members get the most from their medical aid onitas Medical Fund announced a weighted increase of 6.9% with the average increase across nine of its plans at 6% — the lowest contribution increases across the large open medical schemes.

This means that more than 227,000 members — about 65% of the scheme’s membership — will experience an increase below CPI, says Lee Callakoppen, principal officer of Bonitas.

“We conducted in-depth research over the past year, which included stakeholder engagement, actuarial analysis and projections to look at how to enhance our benefits. In addition, we analysed feedback from more than 10,000 member surveys, researched international healthcare protocols, trends and disease burden rates in SA. “The result — we have stayed

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Lee Callakoppen … we have stayed true to our commitment. true to our ultimate commitment of giving more value to our members, by reducing out-of-pocket expenses, enhancing benefits and providing additional preventative and managed care.”

Callakoppen says the scheme remains financially sound with strong solvency levels and the ability to pay claims. Despite investing more than R1.4bn back to members in 2021 and 2022, the scheme saw its reserves increase to R8.8bn last year as a result of shrewd investment management strategies. No other open scheme has been able to grow its reserves to the extent Bonitas has.

However, in the past year an erratic claims’ catch-up has

emerged. This is why, he says, Bonitas has applied a modicum of conservativeness to its approach to remain sustainable for members, regardless of increased claim patterns.

In the past year, Bonitas grew its membership by 62,000 principal members, 80% through organic growth. In a declining industry, this is a noteworthy achievement.

“New members are 13 years younger than the average, which means we have succeeded in attracting a younger, healthier profile which is coveted across our industry. We attribute this to offering a diversified product range from hospital plans to network options and Edge plans, all of which are driven by innovation and technology,” says Callakoppen.

MORE VALUE Bonitas’ research has identified various healthcare trends and needs. The scheme has ensured these needs are met in its latest plan benefits — which are subject to approval by the Council for Medical Schemes — and enhancements.

“We implemented networks at the most favourable tariffs for our members so that they can avoid out-of-pocket expenses and get more value from their medical aid. This applies to GPs,

medication, dentistry, optical, specialists and hospitals. Not only do we direct members to the most efficient hospitals, with the best healthcare options, but the discounted tariffs reduce co-payments or eliminate them,” he says.

The scheme has also enhanced its specialist reimbursement rates which allows 85% of its members to have full cover, wallet-free specialist visits.

“Our specialist network ensures members are covered with the top 15 specialty types contracted into the network. We have introduced three tiers of network specialist rates, based on experience and proximity.

The key focus is on specialty types with high claim volumes and major medical costs such as gynaecologists, physicians and cardiologists.”

The Bonitas Mental Healthcare Programme has been introduced across all plans for 2024 with depression included as a chronic condition in response to greater need for mental health services. The scheme also offers its members access to Panda, a digital platform available through the Bonitas app, which provides them with easy access to expert help, mental health information and community support.

A network of

physiotherapists has been established so members can access the benefits of Bonitas’ back and neck programme in more remote areas.

The Bonitas Be Better Benefit will be introduced for the first time in 2024. Funded completely from risk, it provides a range of screening tests and benefits to ensure members have access to the necessary preventative screenings, to allow for early detection and to be put onto a

NEW MEMBERS ARE 13 YEARS YOUNGER THAN THE AVERAGE, WHICH MEANS WE HAVE SUCCEEDED IN ATTRACTING A YOUNGER, HEALTHIER PROFILE path to wellness. The Be Better Benefit is available on all options, except BonCap. As an added bonus for 2024, childhood immunisations following the state vaccine schedule will be added to six plans.

Bonitas has lowered the age of administration for the Human Papilloma (HPV) vaccine to prevent cervical cancer on all

plans. The scheme now allows for two doses for females aged nine to 14 years and three doses for females aged 15 to 26 years per lifetime.

It has also increased the child dependant age to 24 years — regardless of whether they are studying or not.

Bonitas’ Benefit Booster is the only benefit in the healthcare industry that provides members access to additional funds to use for out-of-hospital expenses. It has been boosted significantly for 2024 and is available after completing an online wellness questionnaire or a wellness screening.

ENHANCED BENEFITS The scheme has also added two emergency room consultations and treatment per family on all options. Members can also book and track an ambulance online.

“Health and wealth go hand in hand,” says Callakoppen. “Our enhanced benefits for 2024, improved preventative care and screening and expanded managed care programmes mean we are staying true to our ethos of providing quality health care while ensuring the financial sustainability of the scheme, balanced against a competitiveness and attractive price point.”

Flexicare offers affordable cover

Earlier this year Clicks announced that it had partnered with Discovery Health and Auto & General Insurance to offer Flexicare, an insurance product providing affordable private day-to-day healthcare cover.

The Flexicare offering has been available since 2018 to corporate employers to provide affordable healthcare cover for staff. Over the past five years, Flexicare has been provided to corporate employers, covering almost 100,000 employees in 450 different employer groups.

Members of Clicks’ loyalty programme, ClubCard, who purchase Flexicare earn 10% cashback on their monthly premium as a loyalty benefit, simply for paying the premium and ensuring the cover remains uninterrupted. The cashback can be used at any Clicks store.

The Flexicare offering is part of Clicks’ continued commitment to providing great value, convenience and rewards for customers, says

Clicks managing executive Vikash Singh.

He explains that Flexicare is not intended to be a substitute for medical scheme membership but instead aims to broaden the availability and affordability of private health care to more South Africans.

Its benefits include unlimited face-to-face and online doctor consultations, medicine, dentistry, eye care, X-rays, flu vaccines, maternity, health checks, blood tests, procedures in GP rooms, HIV care and private ambulance services, all within the designated network of healthcare professionals.

There is also an optional add-on benefit of trauma cover at a private hospital for an additional fee. Trauma cover provides additional private emergency healthcare services for the individual and all registered beneficiaries for a range of serious events including burns, car accidents and serious head or chest injuries, to name a few.

Key factors to help evaluate performance A recently released report found that the number of beneficiaries covered by medical schemes has remained stagnant in the past decade and has not passed the 9-million mark.

The only exception to this was the Government Employee Medical Scheme (GEMS), a restricted scheme, which increased its number of beneficiaries by 3.6% in 2021.

Alex Forbes’ Medical Aid Insights 2022/2023 analysis is based on the financial results of the 10 largest open and 10 largest restricted medical schemes by principal membership over the 2020 and 2021 period.

It found that there were 73 registered medical schemes in SA at the end of 2021, three less than 2020 as a result of mergers, compared to 144 in 2000. The number of open medical schemes declined by 64% while restricted schemes declined by 42%. The decline is primarily as a result of amalgamations among smaller and less sustainable schemes.

The report explains that when evaluating the performance of medical schemes, the key factors to consider are their size and scale; membership growth; membership profile, which includes the average of members; financial results; and solvency levels.

Larger schemes, points out the report, tend to have a more stable and predictable claims experience and should also have greater negotiating power when setting prices. Schemes with a smaller membership base, on the other hand, tend to have a more variable claims experience which increases the risk that member contributions may not be sufficient to cover all the claims and expenses.

“This variability is compounded by the negative impact of high-cost claims, especially in the current environment where schemes are required to pay in full for the cost of prescribed minimum benefits (PMBs) regardless of the rates charged,” says the report.

Schemes that are able to grow the number of members reduces the volatility of a scheme’s claims and improves the profile as new members tend to claim less than the average member in their first

/123RF — TEVARAK11 year of membership. Schemes with a younger membership profile will also benefit as younger members tend to have a lower chronic prevalence.

The medical schemes industry grew by 1.5-million principal members and 2.4million beneficiaries between 2000 and the end of 2021 with the 73 operating medical schemes having a total of 4.06million principal members and 8.94-million beneficiaries.

In 2021, the industry added 37,000 members, primarily driven by Discovery Health Medical Scheme, the largest open scheme in SA, and GEMS, the largest restricted scheme.

Based on the number of principal members, Discovery’s total market share has grown from 16% in 2001 to 33% at the end of 2021. This is in contrast to the rest of the open medical schemes which decreased their market share from 54% in 2001 to 25% in 2021.

The report says one of the most important contributing factors in a scheme’s performance is the risk profile of its members including the average age of beneficiaries; the ratio of pensioners (over the age of 65); and the average family size. The average age of beneficiaries has been steadily increasing since 2011 with significant increases in 2012 and 2017.

“As a scheme gets older, we expect the average claims per member to increase, with a benchmark of a 2% increase in

LARGER SCHEMES TEND TO HAVE A MORE STABLE AND PREDICTABLE CLAIMS EXPERIENCE

average claims per year in average age,” says the report.

A typical claims curve over a member’s lifetime, it adds, will include hospital cover and limited or no day-to-day cover for young and single members; hospital cover, day-to-day cover, maternity benefits and limited chronic benefits for families with children; hospital cover, higher day-to-day cover and chronic benefits planning for middle-aged members; and hospital cover, comprehensive day-to-day cover, higher chronic benefits and cover for joint replacements and other age-related conditions for those who are retired or planning to retire soon.

The pensioner ratio for open schemes increased from 10.8% to 11% in 2021, in line with the overall ageing profile of the medical scheme population.

Over the past 16 years there has been a decrease in the number of young, working members. The one exception to this is the age group 35 to 39 years which saw growth. The report attributes this to women seeking medical protection during their childbearing years.

Another interesting trend noted by the AlexForbes analysis is the declining family size with fewer dependants per principal member being registered on medical schemes over time. As dependant children become selfsupporting adults, they become principal members themselves, or affordability issues could see some beneficiaries removed from cover and added back on as dependants when they need medical cover.

The report says medical schemes may use waiting periods to try to control this antiselective behaviour.

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INSIGHTS: MEDICAL COVER OPTIONS FOR 2024

Bestmed enhances offerings for 2024 • Improvements and options aim to place more control in members’ hands estmed Medical Scheme has announced a 9.6% average weighted contribution increase for 2024 as well as a series of enhancements to its existing product range and wellness and preventative care benefits.

Leo Dlamini, CEO and principal officer at Bestmed, says the key focus for the year ahead was ensuring minimal changes to its benefit options to maintain benefit richness while providing enhanced preventative care and wellness benefits across its Rhythm, Beat and Pace product ranges.

Bestmed, which turns 60 in 2024, is SA’s largest selfadministered medical scheme and the fourth largest open medical scheme in the country.

For the fourth consecutive year, the scheme has added to its membership base, reporting 10.6% growth in principal members. The scheme now has more than 240,000 beneficiaries. It has also been able to attract younger members resulting in a steady decline in average beneficiary age and has reported significantly lower nonhealthcare expenses than those of the other large open medical schemes.

It boasts strong solvency ratios at 41.74% (at December 2022) compared to the minimum statutory requirement of 25%.

The enhancements to its

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Leo Dlamini … competitive.

2024 product ranges are intended to maintain the value for money its members have become accustomed to.

The insertion of a Mirena or other intrauterine devices will now be paid for from preventative care benefits on the Rhythm option, as well as the majority of the Beat plans.

The scheme will also pay pap smear consultation fees in addition to the pathology cost for selected options, as well as glaucoma screenings for beneficiaries 50 years and older as a preventative care benefit at a contracted optometrist once a year. These are in addition to Bestmed’s competitive range of complementary care benefits including flu, pneumonia and travel vaccines, female contraceptives and dental care.

Its out-of-hospital radiology benefits have been enhanced by adding one lumbar and cervical spine region scan to the specialised diagnostic imaging

(MRI scans, CT scans, isotope studies and PET scans) benefit across all options except the Rhythm range.

Bestmed plans to launch Beat3 Plus in 2024 for members who want comprehensive inhospital cover along with rich preventative care benefits and more savings to cover their day-to-day healthcare needs.

Offering a 25% annual savings account, the option is easy to understand and members can carry over any leftover savings to the next year.

“The enhancements and options place more control in members’ hands, allowing them to plan and budget more effectively around their unique healthcare needs,” says Dlamini.

FOR THE FOURTH CONSECUTIVE YEAR, THE SCHEME HAS ADDED TO ITS MEMBERSHIP BASE, REPORTING 10.6% GROWTH IN PRINCIPAL MEMBERS The scheme’s comprehensive maternity benefits are accessible to members across Bestmed’s product ranges, providing quality prenatal, delivery and postnatal care, while reducing risks to both mothers and babies. Its maternity benefits include check-ups, screenings,

antenatal supplements and any necessary medical intervention.

Paediatric immunisations — which are not included on Beat1 — and three baby growth and development assessments for beneficiaries up to two years of age are included as preventative care benefits.

Bestmed has introduced a range of interactive online tools as part of its Tempo wellness offering to enable members to cultivate a healthier lifestyle.

Members now have access to their Tempo Get Active (fitness), Nutritional Health and Emotional Wellbeing Journeys via the Tempo portal on the Bestmed app and member portal on the Bestmed website.

Members are able to set personal wellness goals, track their exercise activity, access mental health resources and make dietary improvements under the guidance of a Tempo dietician.

“The Tempo Wellness programme has been bolstered by the additional features and functionalities that speak to the heart of our commitment to preventative care,” says Dlamini. “We are empowering members to lead an informed and healthy lifestyle.”

As members’ healthcare needs and expectations continue to evolve, Dlamini says the scheme is committed to ensuring its offerings remain advantageous and competitive, while maintaining the integrity and continuity of the scheme into 2024 and beyond.

Take time to read the small print Each year, medical schemes allow their members to change their plan they opt for within the scheme.

Dawn Ridler, an independent financial adviser, points out that medical aids are often the single largest expense after a home mortgage, so it’s worth taking a few minutes to review that expense.

“Following the mid-year and suspended increases we saw during the pandemic, medical schemes have now reverted to their normal schedule of imposing increases from January. Increases have ranged from a weighted average increase of 10.8% from Fedhealth and 9.6% for Momentum. The latter has lifted benefit limits by about 5.5%.

Bonitas announced a more reasonable weighted increase of 6.9% while Discovery Health announced a weighted average increase of 7.5% — but with a fair amount of difference across its various plans. Executive plans, for example, have a 12.9% increase while Classic Comprehensive has an 11.9% increase, but these high increases have been muted by the low increases in the Discovery Saver options.”

Ridler says not to be fooled by the lower-than-expected

/123RF — 9DREAMSTUDIO price increases on Discovery’s Saver options where the medical savings allocation has been slashed, in some cases by as much as 50%. To achieve this so-called below-inflation increase, Discovery has cut the medical savings account allocation from the net contribution paid by 5%.

Medical scheme benefits typically erode each year, so a smart move is to pair up your medical aid with a medical gap cover product which allows you to downgrade your plan and save more than the cost of the gap cover, says Ridler.

What brokers don’t tell you, she adds, is that because of the remuneration structure of medical aids, you are unlikely to have a broker who can assist

you with this. “If you have an independent financial adviser looking after your wealth holistically then they can help you,” says Ridler.

Comprehensive plan comparisons for medical schemes and gap cover are available on each provider’s website although they don’t clearly highlight the changes year on year.

She points out that not all gap covers are created equal.

“Discovery has a gap cover that, for most of us, would be almost double the cost of any other gap cover with the only benefit being the seamless claim process. Which is why it’s important to get a comparison.”

For those who frequently travel outside of SA, most

medical schemes provide travel cover of up to R5m. What is less widely known is that gap covers can double this amount, she says.

“For most people the savings portion of any medical scheme plan is usually eaten up in the first couple of months. This is where gap cover with a savings allocation specifically for specialists is a good idea. Try not to use this benefit so that it’s there for an emergency. The savings portion of a gap cover policy is always your money and you might even get a magnanimous 2% interest on it.”

The smartest way to manage medical expense in the current environment, she advises, is to make sure that expensive potential hospital expenses are covered, in full, by adding gap cover and having your own medical savings account for day-to-day expenses.

“If you use a bank like Thyme Bank for this, you’ll also get a better interest rate and have instant access to the funds.

Keep all receipts for those dayto-day expenses, including prescription medications, as these can be offset against tax, especially over the age of 65.

Don’t forget to check your tax practitioner is factoring this into your tax return.”

Council softens stance on changes The Council for Medical Schemes (CMS) recently rebuked a handful of prominent open medical schemes for announcing their 2024 contribution increases and products before they had been approved and signed off by the CMS. This is despite the fact that

schemes typically announce their plans for the following year in September each year in order to allow members time to consider the various offerings before making changes in January. The CMS usually provides approval towards the end of November or early December.

Some of the schemes concerned responded that their approach was in line with the requirements of the Medical Schemes Act which requires them to communication contribution increases and product changes clearly and timeously to members and that a failure to do so could leave

them in breach of their obligations.

The CMS ultimately softened its stance, requesting that schemes could communicate the changes to members but needed to make clear that the changes were still pending regulatory approval.

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INSIGHTS: MEDICAL COVER OPTIONS FOR 2024

Select options catering for all stages of life Ensure your •choice best suits your medical and financial needs at the time here is a school of thought in some circles that there is little point in investing in an ongoing health care coverage plan: medical scheme membership is too expensive, particularly if they rarely get sick and, on the odd occasion that they do, they can fund their own day-to-day doctors’ expenses.

Medical aid is often a grudge purchase — something many people don’t willingly prioritise.

However, the benefits of being a medical scheme member far outweigh the cost, and there is no guarantee that one’s health will always be good enough to cover expenses out of pocket.

Applying for medical scheme membership later in life also has its drawbacks, points out Medshield principal officer

T

Kevin Aron … health is an asset.

Kevin Aron. “Only existing members of medical schemes are protected. The Medical Schemes Act allows for waiting periods of up to 12 months while late-joiner penalties can be imposed on individuals who only choose to join a scheme later in life.”

He says the secret to affordability is selecting an option that will benefit you long term.

“Your health is your greatest asset, requiring careful financial consideration and planning.

While choosing the right plan can be pretty complex, it will mean you don’t have to rely on state clinics and hospitals for care. It also means you can have tests, screenings and procedures done early without waiting to save enough cash and potentially worsening your condition.”

Aron suggests considering what type of plan you can afford and your current health status, including your age and other risk factors, and then consider what you may need in the future to ensure your choice of medical scheme has plans that could support you as your circumstances change.

“Many medical schemes and their accompanying loyalty programmes encourage minimising those risk factors by exercising and having a healthy lifestyle. Schemes also negotiate preferred rates with healthcare providers to ensure that benefits last throughout the year, but healthcare provider networks may differ from option to option.

It’s crucial to ensure your choice best suits your medical and financial needs and to understand the benefits and

day-to-day Limit. Like MediValue this option also has both a Prime and Compact category. Both benefits are the same but, for a smaller contribution, the Compact category requires the compulsory use of Medshield Provider Networks. MediBonus is the best choice for corporate employees and individuals who need comprehensive unlimited in-hospital cover and extensive day-to-day benefits.

PremiumPlus provides the most comprehensive cover with freedom of choice, including no network restrictions, 200% cover for specific in-hospital procedures and a personal savings account to manage daily healthcare needs.

“Even if you don’t utilise doctors for routine checks, at the very least everyone should have unlimited in-hospital cover in case of major medical emergencies,” says Aron.

“MediCore is a hospital plan for those who require unlimited hospital cover with full PMB cover. Specific inhospital procedures are paid at a higher rate (Medshield Private Tariff 200%).

“Our mission statement even includes the fact that we partner with members to ‘enable access to sustainable and affordable quality health care through innovative products and benefits’. This mission statement lends itself to our continuous efforts to partner with capable and quality healthcare providers and negotiate with those partners to provide value for money services to our members.”

Medshield increased selected benefit limits by an average of 5% for 2024.

/123RF — YUROLAITSALBERT networks of your selected option by discussing it with your financial adviser.”

All these factors, he says, ensure you get the best value for money.

Most medical schemes offer various plans, structured to suit one’s lifestyle and age.

“Ideally, you want to look for a scheme that has different options catering for childhood, adulthood and well into old age,” he says, adding that Medshield is one such scheme.

The scheme offers an affordable digital plan that enables young, healthy, techsavvy first-time medical aid buyers to afford healthcare cover without any financial strain on their day-to-day lives through a plan called MediCurve, which offers a bouquet of in-hospital and outof-hospital benefits with free, unlimited virtual GP consultations through the Medshield SmartCare benefits.

MediSwift is a cost-effective, value-based hospital plan that provides amateur sportsmen and women with additional

physiotherapy and biokinetics benefits both in and out of hospital.

The MediPhila option protects young families from unforeseen medical costs through unlimited hospital cover for PMB conditions, per beneficiary limits for non-PMB in-hospital treatments and an out-of-hospital benefit limit for specific services.

MediValue is the ideal option for individuals needing unlimited hospital and day-today partial cover. This option has both a Prime and Compact category. The benefits are the same, but the Compact category requires the compulsory use of Medshield Provider Networks for a smaller contribution.

MediSaver is perfect for independent individuals who want to manage their own out-of-hospital healthcare expenses through a personal savings account with unlimited hospital cover.

MediPlus is the answer for middle to upper-income earners, offering unlimited inhospital cover and a generous

Failure to develop LCBO framework deemed ‘irrational’ The medical schemes industry has long been pushing for a regulatory framework for lowcost benefit options to be introduced.

Unlike medical scheme plans which are required to cover a list of prescribed minimum benefits (PMBs) by the Medical Schemes Act, lowcost benefit options typically cover primary care services such as visits to a GP and basic medicines but don’t include hospital cover or cover for more serious illnesses.

Medical schemes believe these low-cost options would enable low-income workers to afford a degree of healthcare cover while at the same time growing the stagnant medical schemes market and alleviate pressure on the overburdened state healthcare sector.

Medical insurance products have become increasingly popular in recent years with more than a million lowincome workers covered by these products. In 2017 regulations came into effect providing protection for existing policyholders of medical insurance products. The exemption continues to be extended every two years.

What consumers need to understand is that medical insurance products are not the same as medical aid and don’t provide the same level of cover.

They don’t, for example, cover

the prescribed minimum benefits (PMBs) that medical schemes are required to cover which allows them to be much more affordably priced. Most also don’t cover hospitalisation.

And unlike medical schemes which are highly regulated, medical insurance products are also not regulated. The industry says they need to be regulated to better protect consumers.

The Council for Medical Schemes (CMS), a regulatory body governing medical schemes, first started work on developing a legal framework for low-cost benefit options more than seven years ago but has failed to finalise the framework.

In frustration, the Board of Healthcare Funders (BHF), an industry body which represents the majority of medical aids in SA, turned to the courts. The BHF says the CMS’s decision not to allow low-cost benefit options is irrational and unreasonable.

In July, the North Gauteng High Court gave the CMS 10 working days to explain why it had decided to block the introduction of low-cost medical aids. The CMS failed to comply with the order.

The BHF maintains that the CMS is blocking low-cost medical aids to drive support for government’s proposed National Health Insurance (NHI).

/123RF — BEE32

For medical schemes to remain affordable, they need a balanced membership consisting of members of all ages.

However, over the past 16 years the average age of beneficiaries has risen, with medical schemes struggling to attract younger members.

The risk profile of its membership base is arguably the most important factor contributing to a medical scheme’s performance, according to Alexander Forbes Health’s 2022/23 Medical Aid Insights. It notes that the average pensioner ratio across the industry increased from 9% in 2020 to 9.1% in 2021.

Open medical schemes were the biggest driver of this, increasing their pensioner ratio from 10.8% to 11%.

Damian McHugh, executive head of Marketing at Momentum Health Solutions, says this trend is not unique to SA with private medical aids globally traditionally struggling to attract new job entrants, partly due to benefit relevance and affordability.

Lee Callakoppen, principal officer of Bonitas, says there are several challenges facing medical schemes in terms of attracting younger members.

“First, there are financial considerations but also the mindset that if they are young and healthy, they don’t need a medical aid. The reality, however, is that there’s always the chance they could develop a medical condition or require an expensive medical procedure sometime in the future. Lifestyle diseases are on the rise and people are developing serious illnesses earlier and earlier in their lives,” he says.

“Younger people have healthcare needs that can be met by medical schemes including dentistry, over-thecounter medicine, cover for chronic conditions such as ADHD, acne and juvenile diabetes and support for mental health conditions, the latter of which has seen increased prevalence in those aged under 40. And not forgetting that they are faced with the same degree of risk when it comes to emergency situations that may warrant the need for health care provided by medical aids, such as accidents.”

is a barrier to entry for young, newly employed individuals.

“The benefit design of many medical schemes requires members to pick an option that includes fixed savings, as well as cover for fixed hospital benefits and even cover for chronic benefits. There’s no flexibility in these kinds of offerings for younger consumers to say they don’t have any chronic conditions, are less likely to be hospitalised for non-emergency procedures and generally claim less than older members,” he says, adding that this is where healthcare insurance becomes such an important solution.

More affordable than medical aid membership, a number of lower-cost healthcare insurance products are now on offer from hospital groups, healthcare providers, insurers and retailers.

Specifically designed for financially constrained consumers, they play an important role in terms of providing access to private health care even though they don’t offer the same level of cover and protection that medical schemes do.

Medical schemes, for the most part, are cognisant that they need to find ways to address the issue of affordability for younger consumers.

Momentum Medical Scheme has been adapting its benefit design so consumers can save on their contribution by choosing cover that suits their life stage. It is the only scheme where savings are totally flexible, allowing members to shape their cover to fit their healthcare needs, as well as their finances.

Attracting younger members is a challenge

MOST PEOPLE ONLY REALISE THE IMPORTANCE OF A MEDICAL AID WHEN THEY ARE WORRIED ABOUT THEIR HEALTH OR THEIR FAMILY STARTS TO EXPAND Callakoppen concedes that there needs to be more education around the fact that taking care of your health from early on is a good investment.

“Unfortunately, most people only realise the importance of having a medical aid when they are worried about their health or their family starts to expand.”

The cost of medical aid membership is frequently cited as one of the biggest inhibitors of scheme membership.

Callakoppen says schemes needs to be agile in addressing these challenges to attract younger members.

McHugh agrees that the total cost of private healthcare cover

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INSIGHTS: MEDICAL COVER OPTIONS FOR 2024

Savings: choose how Lower cost of cover without increasing risk of exposure they are structured Flexibility •allows Fehealth members to decide what works best for them edical schemes are under enormous cost pressure which is why they have been unable to comply with the Council for Medical Schemes’ suggestion to limit their annual contribution increases to 5%, says Jeremy Yatt, principal officer of Fedhealth Medical Scheme.

In addition to the rising cost of health care which schemes need to factor into their annual increases, most schemes are not growing their membership base with younger, healthier members. An older membership base typically has higher claims, costing the scheme more.

Yatt says that one of the biggest misperceptions is around how the medical savings component of a medical scheme membership works.

“Most schemes allocate a portion of the monthly contribution to a member’s medical savings account, typically around 25%, which can be used to pay for medication, GP visits or other day-to-day healthcare needs. Members can use their entire medical savings allocation for the year in the first

M

Jeremy Yatt … upgrade plan. six months of the year, in which case the scheme is essentially loaning them the money in advance. When people say they have run out of medical aid, that’s not exactly true: they are still covered for the big-ticket items such as a hospital admission, but they have run out of the medical savings component of their plan.”

Fedhealth operates a little differently: rather than offering a medical savings benefit, the scheme’s MediVault and Wallet benefit allows members to choose how their medical savings are structured. A flexible savings plan means that members only start paying for their day-to-day benefits when they intend to use them.

MEMBERS KNOW UPFRONT HOW MUCH DAY-TO-DAY FUNDS THEY HAVE AVAILABLE FOR THE YEAR

Members who select the flexible savings plan transfer funds from their MediVault to their Wallet when they need to pay for day-to-day expenses, with the funds repaid interest-free over 12 months.

Members who choose the savings plan have a predetermined amount transferred to their Wallet on January 1 each year. This amount is pro-rated for those who join after January 1.

Members know upfront how much day-to-day funds they have available for the year and start to repay that amount every month from the beginning of the year. Both options allow members to transfer additional funds if they should need it.

“Medical savings have now become an accepted part of a medical scheme plan. The challenge with a conventional medical scheme is that most people either have too much medical savings or too little as most plans are rigid in this regard. We’ve tried to circumvent that rigidity by providing more flexibility so that members can decide what works best for them,” says Yatt, adding that this flexibility is ideally suited to younger, healthier members as it allows them to choose a more affordable plan.

Fedhealth is the only scheme which allows members to upgrade their plan during the year, typically within 30 days of a life-changing event such as a pregnancy or being diagnosed with a dread disease like cancer.

“This means members don’t

have to pay for a more expensive plan just in case,” says Yatt.

It is possible to keep your medical scheme membership affordable if you pay attention to how your scheme works, he adds.

Fedhealth was the first scheme to raise the child dependant age to 27, although other schemes have since followed suit and also raised the child dependant age.

Yatt advises prospective medical scheme members to read the fine print and look carefully at each scheme’s benefit options. “Don’t choose your medical scheme based on its loyalty programme but rather on what benefits it offers.”

His advice to younger people is not to fall into the trap of thinking they don’t need to be covered by a medical scheme.

“Without the benefit of medical scheme membership, you risk having to self-fund expensive healthcare treatments should you be diagnosed with a serious illness such as cancer. This can quickly decimate your personal savings. Instead, be clever about it, factoring in that more affordably priced plans will have limitations in what they cover.

Take away that shortfall with complementary products such as gap cover,” he says.

MEDICAL SAVINGS HAVE NOW BECOME AN ACCEPTED PART OF A MEDICAL SCHEME PLAN

As medical schemes announce their contribution increases for 2024, a common theme is the increasing trend of medical inflation exceeding consumer price inflation (CPI) by up to 3% to 4%.

The primary driver of this increase is rising healthcare consumption, says Anthea Towert, principal consultant at Insight Advisory Solutions.

“Medical schemes need their contributions to be sufficient to cover the costs of healthcare claims of their members. So, when claims increase, contributions need to increase,” she explains.

“While salary and wage increases will likely be pinned close to inflation of about 6% in 2024 what these medical scheme increases means is that the same medical scheme option will take more of your salary next year since contribution increases announced so far range from 6.9% to 16%,” says Towert, adding this makes the process of making careful choices about your medical scheme for 2024 all the more important.

Practical and helpful tips on maintaining an affordable level of benefit protection appropriate for your health risks without increasing your exposure to high out-of-pocket costs, she says, including thinking about your anticipated healthcare needs and state of health.

“Medical schemes generally only allow a change in benefit plan once a year on January 1.

When it comes to your health needs, it’s not possible to predict a high-cost medical event or trauma like a motor vehicle accident, carjacking or even a cancer diagnosis, but some

Anthea Towert … prioritise. healthcare needs can be anticipated, like a pregnancy, dental work or a pair of glasses.”

Preventative health screening, she explains, allows for early diagnosis and treatment of disease and, in most cases, is risk-funded by medical schemes. By using this benefit, members can get a free and reliable predictor of their health status and anticipated future healthcare needs and make a more informed choice of the best benefit plan for their needs. She suggests making sure you understand what benefit plans are on offer in your medical scheme.

“Most medical schemes offer a range of plans to suit varying health needs and affordability.

The richer the benefits basket, the higher the contributions. To manage costs and keep utilisation reasonable, schemes will apply benefit rules and restrictions such as limits, copayments, medicine formularies and treatment protocols. More affordable options in the plan range tend to have tighter restrictions, which can increase your risk of exposure. It is

important to understand the rules when choosing a benefit plan appropriate to your state of health.”

Towert says it is important to prioritise cover for unexpected and high-cost episodes of care.

“As we age and our state of health changes, we’re more likely to develop health conditions and experience medical events that require longer-term treatment. For this reason, it’s essential to prioritise hospital cover over day-to-day benefits as the foundation of your healthcare plan,” she says.

Day-to-day healthcare costs, she adds, can be managed and planned to some degree by selfmedicating for some acute conditions, choosing affordable generic medicines over originator drugs, choosing a clinic or nurse practitioner to check blood pressure and save on a GP consultation fee or delaying the purchase of a new pair of glasses.

“What you want to avoid is inadequate cover for major medical episodes of care which can lead to compromised treatment, disability and even death, coupled with significant financial hardship,” she says.

Towert advises linking a medical gap cover with a hospital benefit plan to provide supplementary insurance to cover the shortfall where doctors charge above medical aid rate and where medical aid levies co-payments and sublimits, particularly in cases of major surgery, cancer treatment or childbirth.

Cover for hospital and major medical expenses is the primary building block for a healthcare plan, providing optimal cover for high-risk

exposure. Medical scheme hospital plans are far more affordable than comprehensive plans, she points out, adding that they can be combined with a medical savings account or a personal savings account to fund planned, non-emergency day-to-day expenses.

“A medical savings account gives you access to funds upfront, but the amount is preset based on the plan option you choose and may be insufficient for your needs. A personal savings account allows more flexibility to save for your needs and earn interest on a positive balance,” she says.

It’s a good idea, she adds, to explore the network options offered by your medical scheme.

“Network options are an attractive alternative when faced with the likelihood of having to lower your cost of cover by buying down your benefit plan and increasing your exposure to high out-of-pocket costs. Network options offer similar benefits to non-network plans but at a lower price. This is made possible through negotiated provider discounts and efficiencies produced through careful contracting with specific healthcare providers such as hospitals, GPs or specialists. Network plans are an effective and affordable way to maintain the benefit cover you need but, importantly, make sure there is adequate coverage near where you live and work.”

Ultimately, says Towert, it’s crucial to balance affordability and healthcare cover appropriate for your health risks. By being proactive and informed, members can make decisions that protect their health without straining their budget.

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