Part 2 of 2
When it comes to medical cover, there is a plethora of choice, but how do you choose the best one for you?
The main determinant should be your medical needs, so it is necessary to have a good understanding of what benefits and services are covered by which options and on which medical schemes, and of course affordability also drives option selection.
Given the wide variety of options available, it is a good idea to consult an adviser accredited with the Council for Medical Schemes to assist you, whereby your medical needs considerations can be aligned to the main benefit categories, which are hospital, chronic and day-to-day benefits.
All members are covered to a large extent by Prescribed Minimum Benefits (PMBs). But if there is a likelihood of a planned (or elective) procedure, cognisance needs to be taken of that. As far as chronic disease is concerned, again, most of the common chronic illnesses are covered via PMBs. However, most schemes cover additional chronic diseases on their more comprehensive options, so it will be worthwhile investigating which options, on which schemes, provide the cover you require.
For day-to-day benefits, history is usually a good indicator of what level of cover you need. If you haven’t previously been on a medical scheme, give thought to what day-to-day benefits you’ve paid from your pocket for the last year. Which providers have you consulted and how often? If you’ve been on a medical scheme before, have you historically used day-to-day benefits up quickly, or have you carried over?
There are two main categories of medical cover; traditional and new generation schemes, and they differ primarily in the way that day-to-day benefits are covered.
Traditional schemes set various annual sub-limits for day-to day benefits (for example for GP consultations, medication, optometry, radiology and pathology). If a sub-limit is exhausted, the member has to fund further services for that benefit category from his / her own pocket. Sub-limits not used during the year fall away at the end of the year, and members access the “refreshed” annual sub-limit set for the following year.
New Generation schemes fund day-to-day benefits from a medical savings account which is funded from a portion of the monthly contribution (up to a maximum of 25%), on an up-front basis (i.e. the scheme makes available the full expected savings account from the beginning of the year even though this is only funded in monthly increments by the member). There is usually no prescription as to how or in what proportions services may be funded from the savings account but, once depleted, members have to pay from their pockets for further day-to-day services. Savings not utilised accumulate from year to year.
Schemes offering a combination of the above two approaches have also emerged, and are referred to as Hybrid schemes.
New Generation schemes are broken in to further categories;
Network plans are designed for first time medical scheme members or lower income employees (contributions are usually income banded, making it far more cost-effective at low income levels). These options rely heavily on the use of provider networks for access to care, from GP’s through pharmacies for prescribed and chronic medication, dentistry, optometry, etc. to hospitalisation. Levels of care will also usually be linked to the PMB protocols so, for instance, medication formularies will be restrictive.
Hospital plans provide cover for hospital admissions and, usually, only the chronic illnesses included in the Chronic Disease List which form part of the PMBs. These plans are suitable for members who are unlikely to need cover for day-to-day benefits, or who are happy to pay from their own pocket for out of hospital services.
Savings plans, in addition to cover for hospital and chronic illness benefits, offer savings accounts from which day-to-day benefits are funded. There is usually no prescription on how the savings are used but, once exhausted, members fund further day-to-day benefits from their own pocket. However, unused savings accumulate from year to year. These plans are suitable for the young and / or healthy who do not require significant cover for day-to-day benefits.
Threshold plans, in addition to savings accounts, offer further funding for day-to-day benefits (once the savings accounts are depleted) from “above threshold benefits”. The threshold benefits can be limited or unlimited, and there is usually a gap between where the savings account runs out, and the threshold benefits kicks in – which is referred to as a self-funding gap. The threshold plans are suitable for families requiring significant cover for day-to-day (out of hospital) benefits like, for instance, dentistry. In addition, it is on these plans where the schemes will usually offer cover for non-PMB chronic illness benefits.
The traditional medical schemes usually offer network plans as well as a range of plans of differing richness for the day-to-day benefits (i.e. the benefit sub-limits will be higher in more expensive plans).
Members of all schemes have an annual opportunity to change options (some schemes do permit changes during the year, but this is the exception rather than the rule), so cover needs to be renewed annually, particularly if there have been some shortfalls, even if these are only perceived. But be aware that changing a scheme would also incur a waiting period to utilise benefits (ranging from three to 12 months).