As medical costs continue to increase ahead of inflation and most people’s salary increases, many medical scheme members are starting to feel the financial strain.
Alexander Forbes Health MD Butsi Tladi says that, during the last month, they have engaged with over 200 corporate clients about the increased costs for medical schemes for 2018, and an overwhelming number shared concerns about affordability.
“Unlike previous years, where we did not see a fall in membership, we are now very worried that financially stressed families will drop medical scheme membership,” says Tladi, adding that, rather than leaving members to opt out with no cover, they are looking for more affordable and appropriate plans.
“As members consider less comprehensive plans, gap cover becomes more and more relevant and we are stressing to clients not to forgo this key component of health insurance.”
Independent financial adviser Duncan Barker of Serala Financial Services says that, although his clients are not “buying down” by selecting cheaper medical scheme options, they are price sensitive.
“They have been complaining for the last few years about how expensive medical aids are getting, without much increase in benefits at all.
"I would definitely say that insurance products are more prevalent now than ever and I do see a space to blend the two.”
GAP COVER INSURANCE
Gap cover is an insurance that meets the shortfall between your hospital bill and the payment made by your medical scheme.
You can get a fairly comprehensive medical gap cover insurance for around R300 per month for the whole family, but you have to be a member of a medical scheme in order to take out such cover.
However, Barker warns that, while gap cover allows people to buy-down their covers, it is creating a market for itself. “Specialists now ask clients if they have it.
"As soon as they know you do, they will charge their highest rates, even when they don’t have to.
"It is almost becoming a self-fulfilling product that is impacting medical schemes as they are getting less money from members because they can now choose to self-insure while still enjoying full cover in hospital.”
Another drawback is that insurance products do not provide for longer-term care. For example, gap cover only pays for specialist bills in-hospital and doesn’t cover a visit to a specialist.
BASIC PRIMARY HEALTH CARE INSURANCE
For individuals who are not members of a medical scheme but want some type of health insurance, there are hospital cash plans and primary health care plans.
A hospital cash plan pays out a predetermined amount per day that a member is in hospital, and is not related to the actual hospital expenses.
A primary health care plan covers non-hospital events such as general practitioners, basic and emergency dentistry, essential medicines, pathology, and prebirth maternity benefits.
A family of four would pay R600 to R700 per month, depending on the package.
“The latest plans out there, such as those offered by Unity Health, are quite comprehensive for accident/emergency cover and definitely a consideration for young families,” says Barker.
However, he adds that, if you need extensive hospitalisation for serious illnesses or surgeries, then you would have to use a state facility.
Alternatively, you could supplement a basic hospital plan with the primary health care plan.
Large financial services companies that provide employee benefits such as medical schemes and insurance solutions are offering their corporate clients different options to meet the needs of their low-income earning employees.
For example, Momentum offers Staff Care Solutions to employers for staff who earn less than R18 000 per month.
This provides a building-block approach in which employers can choose a combination of benefits most suitable for their employees’ needs and budgets. This includes the Momentum Health4Me insurance, which is a primary health care plan with a hospital cash benefit.
Tladi says that Alexander Forbes offers solutions for young employees whose starting salaries exclude them from medical scheme cover, as well as ensuring that other low-income earners can now have some level of cover.
She warns, however, that insurance products on their own are limited in coverage.
“These are products designed to offer possible solutions for a previously uncovered population. They are not a substitute for medical schemes and must not be confused as such.”