It is time to check your medical aid renewal plan – Planning your healthcare finances may save you
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Given the financial constraints brought about by the pandemic, many medical scheme members find themselves under significant pressure to cut costs, while ensuring access to quality private healthcare when they need it.
Between now and December, medical scheme members will need to make important decisions about their healthcare plans as medical schemes announce their premium increases and benefit changes for 2022.
According to Martin Rimmer, CEO of Sirago Underwriting Managers, private health care costs from 2000 to 2012 have doubled in real terms. The cost trends tell us that by 2028, they will have doubled again.
“There are many complex reasons for this upward trajectory. Key is the fact that unlike the pharmaceutical industry, there is no pricing regulation on healthcare provider tariffs. With South Africa facing a dire shortage of healthcare professionals, specialists can charge any rate, often more than 300% to 500% higher than the rate paid by medical schemes. Most notable is that while medical scheme contributions increase every year in a bid to keep pace with healthcare hyperinflation, the benefits are decreasing. This means that many medical scheme members are paying more for the same or less medical scheme benefits.¹ They are also facing greater out-of-pocket healthcare expenditure than ever before – especially where consumers have been forced to buy down on cover and benefits due to affordability challenges,” explains Rimmer.
The growing quantum of gap claims values is a key indication of this growing trend, with Sirago seeing a marked increase in the shortfalls between what medical schemes pay versus what healthcare providers charge for in-hospital procedures.
“While the average gap claim is between R10 000 to R20 000, we are seeing the frequency of mega claims in excess of R40k on a daily basis. These claims are for tariff shortfalls not covered by medical schemes that members would have had to pay from their own pockets, had they not had gap insurance in place. It is also not only members on lower benefit options that are facing these shortfalls – even on comprehensive, top of the range medical scheme benefit options, members are facing onerous tariff shortfalls for in-hospital procedures,” says Rimmer.
Medical scheme members will have until the beginning of December to make any changes to their medical scheme options for 2022, and in the current environment where private healthcare costs are in an unsustainable upward spiral, many members are looking to buy down on their cover, taking on more of their day-to-day primary healthcare expenditure as out-of-pocket costs, while maintaining access to private healthcare for any hospitalisation or serious health crisis they may face in future.
“There are many interconnected variables to consider with any benefit or option change on your medical scheme. Your personal needs, your claims history, any pre-existing health conditions and affordability all come into play. And of course, no one knows what health risks may occur in the future. Work with your professional healthcare broker to devise the best plan to ensure that your healthcare needs are covered and that any change won’t leave you compromised or facing hefty out of pocket expenses that you cannot afford,” says Rimmer.
The following should be taken into consideration when considering changing your medical scheme benefit option:
What is your current day-to-day expenditure on healthcare and do your existing benefits provided sufficient cover or were you left out of pocket?
Are you or any dependants registered for a chronic condition, and does it qualify under the 27 regulated chronic conditions or as an additional disease listing for cover? Consider whether the premium saving on a lower benefit option is worth the cost of the additional chronic medicine which you may have to self-fund on a lower benefit option.
When you pay less, understand that you normally receive less cover and benefits. Be comfortable with the level of risk you can afford to take on as out-of-pocket costs.
Get Gap Cover to protect you from big shortfalls on in-hospital treatment, from the anaesthetist to the specialist surgeon. A broker will be adept at taking your through the various gap options that are suited to your needs, and that would best match your chosen medical scheme option.
Benefit options that pay for Prescribed Minimum Benefits (PMBs) only – PMBs are conditions that medical schemes must pay for, at cost, according to regulations – will have an impact on your pocket as you will need to pay for any non-PMBs. A plan that covers hospitalisation only means that all day-to-day primary care, such as GP visits, dentistry, optometry, radiography, and medication, will need to be covered by you. Make sure that you apply the discipline to make provision for when you may need medical care.
If you are considering a move to a lower benefit option, do so within the same medical scheme. You’ll avoid any waiting periods, and it provides you with an opportunity to either buy-up within the scheme to acquire better benefits or to buy-down with the purpose of securing lower contributions. While most schemes only allow you to buy-up at the beginning of a benefit period, most will allow a buy-down at any time during the year.
Before buying down, make sure that your current benefit needs are comprehensively reviewed to ensure that buying down will not leave you out of pocket or without benefits that you simply cannot afford to self-fund. (This is a task best undertaken with the advice and guidance of a professional healthcare broker.)