Guide to medical scheme options for 2012

2 Nov 2011

Traditional options, new generation options, network options, day-to-day benefits, in-hospital coverage, chronic illness benefits - there's so much to consider when choosing medical aid. Here's a general overview and breakdown of the changes and benefits for medical schemes for 2012, as well as some healthy advice about choosing a medical aid option.

John Cranke, Regional Head, Coastal Region PSG Konsult Corporate

An overview

Increases for the schemes range from about 7% to 12%. The average increase, for the top 10 largest schemes, is about 9.5%. However, it's important not to blindly accept the average headline increase declared by your scheme for the following reasons:

In many cases the increases have differed from option to option.
In some cases the increases have also differed depending on your family configuration - with different increases declared for adult dependants and/or child dependents.
Not all schemes offering salary bands (contribution dependent on salary) to determine contributions have increased these in line with salary inflation. This means you may be in for a surprise when you get your salary increase during the year.

In summary there are three broad approaches followed by schemes, which relate to the provision of out-of-hospital benefits:

Traditional options: A specific sum/sub-limit is earmarked for various services like GP's, pathology, radiology, dentistry, specialists etc. Once a sub-limit is exhausted you pay from your pocket and unused benefits fall away at the end of the year.

New generation options: You are allocated a savings account at the beginning of the year from which all day-to-day expenses are met. Once the savings have been exhausted you have to pay (unless there is extended cover). Importantly, unused savings rolls over to the following year.

Network options: Members have to use providers from a prescribed network. Network options are usually aimed at first time medical scheme members or lower income employees, and therefore usually apply stringent rules to the provision of cover.

It is imperative that members choose the best option to suit their needs (and, hopefully, their pockets!). The information can be overwhelming, so it is best to seek the advice of an accredited broker/consultant. Remember, the option can be changed annually (note the cut-off date). Although some schemes allow it during the year this may result in benefits being pro-rata causing confusion so is not advisable.

Possible pitfalls when changing your medical scheme option

Hospital cover required:

Does your option have Overall Annual Limits, or not? If so, are you comfortable with this? Medical schemes are obliged by law to cover you for Prescribed Minimum Benefits (PMB's), which stem mainly from life-threatening injuries or diseases. You may be required though, to use the scheme's Designated Service Provider if you/your family claim expenses up to the limit stipulated for your option or, in a worst case scenario, be denied on-going non-PMB benefits.

Do you understand:

What the co-payments (and deductibles) on your option are?
What reimbursement rate you enjoy for service providers in-hospital (e.g. doctors, specialists, anaesthetists)
That 100% of the scheme rate may still mean the potential for significant shortfalls for in-hospital treatment, even if your admission has been authorised?
That your scheme may have an arrangement with providers (contracted with the scheme) which will allow you to enjoy full cover. If so, are you happy to use them?
That many schemes have entered into arrangements with specified hospital networks, which mean that if you use these you qualify for a discounted monthly contribution.
That you can take out gap cover to cover the shortfalls and co-payments?

Chronic illness benefits

In terms of the Medical Schemes Act, there are 27 chronic illnesses which all options on all schemes need to cover completely. However, the schemes can decide which medication they will cover in full (usually the generic) and which pharmacies you can use. Take note of this so you don't end up paying a co-payment.

More expensive medical scheme options cover additional chronic illnesses - so it will be worth your while to investigate this.

Day-to-day benefits

Do you need out-of-hospital or day-to-day benefits in addition to a hospital plan and the compulsory chronic illnesses? A good way to determine this is to assess the history of your claims, then take into account any future expected expenses, and match this to a suitable option.

Most members select options that offer them at least a component of day-to-day cover and many schemes are relying on cost containment measures such as prescribing provider networks including GP's and specialists. Not doing so, would result in restricted benefits and/or co-payments.

Also check your preventative care benefits (such as mammograms which cost around R900) to see if they are included in day-to-day benefits. Increasingly schemes are funding these separately, which can mean a substantial saving.

In addition to the above, some other ways to help stretch your day-to-day benefits is to:

Use generic prescribed medication wherever possible.
Request that claims are paid at the scheme's rate and to claim within specified sub-limits.
Fund non-critical items from your pocket to retain funds for essential expenses.

There are so many factors to take into consideration that it is best to contact your scheme or accredited broker for a medical needs analysis.