Understand your medical cover when 'buying down'

2018-11-16 15:12

Every year our pockets are further squeezed by price increases in basic necessities, such as fuel, electricity and groceries.

At the same time medical inflation continues to increase well above salary increases.

According to this year’s GTC Medical Aid Survey, in the past 10 years medical aid premiums have increased by 104.87% cumulatively; salaries increased by 80.20%, “which clearly demonstrates the pressure that consumers have been under in trying to keep up with healthcare costs”, says Jill Larkan, head of healthcare consulting at wealth and financial advisory firm GTC.

With increasing cost pressures on members, medical schemes have introduced more cost-effective plans.

Larkan says these entry-level plans are an opportunity for lower-income earners to access some private healthcare cover.

But existing members, who expect slightly more comprehensive coverage and downgrade to these cheaper plans, are often surprised to discover they are not covered for a number of procedures.

“In healthcare, the mantra ‘you get what you pay for’ could not be more apt,” says Larkan, adding that it is now more important than ever for members not only to look at price – which remains the most important consideration for many members – but also to consider which benefits they are forfeiting.


The Council for Medical Schemes reported to Parliament that complaints from medical aid members have increased by 29% from 1 017 to 4 536 during 2017/18, compared with the previous year.

This was attributed largely to a lack of understanding of the cover provided by their medical aids.

“This is in line with our experience: One of the biggest reasons for members’ unhappiness about a selected scheme is not knowing what their plan pays for,” says Larkan. So, before you change plans, understand what you would be signing up for.


Victor Crouser of Alexander Forbes Health says one of the key trends in the past couple of years has been the expansion of network arrangements.

Crouser says schemes are increasingly offering network options which come at a discounted rate to the standard “freedom-of-choice” type option.

The discounts can be as much as 20% in monthly premiums, provided members use only selected hospitals for elective (non-emergency) procedures.

“Members need to understand and assess whether the network is suitable for their needs – geographically, specialist providers, personal preference and so on.

“There are usually significant co-payments for the member, if they do not use the networks for any reason,” says Crouser who says these networks can cause confusion as many options have enforced network providers or designated service providers (DSPs) within their normal plans and this is becoming increasingly difficult for members to understand.

This means members could be required to obtain their medication from specific pharmacies only to avoid a co-payment.

“Members need to understand this – so, for example, in my own case I have a Pick n Pay pharmacy near my house which I have used in the past. If I choose to use it going forward, I have to pay in about R130 each time I obtain my chronic meds.

"If, however, I used the Clicks pharmacy – about 2.5km from my house – I would not have to pay this amount.

"So, members need to understand where DSP/networks apply and the consequent financial effect of their choice should they choose not to use the network provider,” says Crouser.


Larkan says often the decision to downgrade a plan is a result of members running out of money in their savings account more rapidly, as the cost of medicines get more expensive.

“This results in members getting disillusioned by having savings accounts in the first place. Out of frustration, members decide to downgrade to pure hospital plans,” says Larkan, who warns that what members do not realise is that in downgrading from a savings plan, they could lose other additional benefits.

For example, many schemes offer doctor visits which are often provided from risk cover when members run out of savings on many of the savings plans.

Larkan says some medical aids, such as Fedhealth, provide unlimited additional benefits provided you use one of its network doctors; Discovery provides up to six additional benefits per family at one of its network doctors.

Larkan says members could also lose the ability to access additional benefits from their top-up/gap cover policies, which often only pay out providing a partial payment is made by your medical aid.

Top-up/gap policies might not perform the functions of a medical aid and might top up only unpaid benefits.


Crouser says that while you cannot fully predict future healthcare needs, members should assess their past healthcare spend (for at least the last year) and at the very least use this as a consideration when they make their option choice each year.

“Their past healthcare spend should include their premium, any co-payments, any unusual expenses (for example, co-payments on surgeons in hospital), over-the-counter medications where they paid cash, etc.

"This should be factored as part of their overall spend and inform their choice of option. They might be better off financially by buying up or buying down,” says Crouser.

Larkan recommends clients conduct their own homework and ascertain their medical expenses for past years, “especially if they have not been submitting everything to their medical aid for processing and recording, and these expenses will therefore not be reflected on their annual tax certificates”.

Larkan says GTC conducts investigations with its clients, offering them personal consultations and assisting with the calculations, which are imperative when considering a downgrade.

“Our consideration with clients is: ‘Will it be more beneficial to pay for out-of-hospital expenses yourself (assuming they are not substantially higher than the costs experienced in past years), or to transfer the risk of covering these to the insurance company?”

If you decide to downgrade to a hospital plan, make sure you at least have emergency savings put aside each month for unexpected out-of-hospital bills.


At its annual report press conference, the Council of Medical Schemes (CMS) confirmed that it had seen an increase in the number of complaints from the Government Employees’ Medical Scheme (Gems).

According to Thembekile Phaswane, general manager of complaints adjudication at CMS, the main complaints have involved non-payment or late payment for claims.

Phaswane said that in many cases member’s claims were only paid after they had laid a complaint with the CMS.

The council has raised the issue with the fund administrator Metropolitan Health and has also questioned why the Gems board of trustees are not more closely monitoring the situation.

They have also had complaints about the non-payment of claims relating to prescribed minimum benefits (PMBs).

Discovery Health Medical Scheme and its administrator Discovery Health are also under investigation for not paying for PMBs in full and for complaints about the treatment of service providers.


The council confirmed that PMBs are being reviewed as medical schemes argue that the inclusion of 270 conditions that schemes must cover in full, makes medical scheme contributions increasingly unaffordable.

According to the 2017/18 CMS Annual Report the average monthly cost of covering PMBs is R805 per member. At this level of cover, it is impossible to offer low cost benefit options to lower income earners.

As part of the restructuring required for implementing the National Health Insurance, the review of PMBs will focus on primary healthcare and diseases with a high primary care burden on communities, such as HIV and TB.

“Costings of the revised PMB benefit package will be undertaken to ensure affordability and sustainability,” the report states.

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March 29 2020