9. How to choose a medical aid
Question
I was retrenched last month and need to join a medical aid. I had a look at a couple of websites and am very confused. What should I look out for when choosing a medical aid?
Answer
Medical aids can seem complex, but they are essentially made up of a number of building blocks.
Hospital benefit
You typically start off with your basic hospital benefit. This covers your treatment inside a hospital. Here is challenge number one – what category of hospital do you choose?
It is important to spend some time on this and wade through the list of hospitals. I recently met someone who bought a medical aid through a call centre based in Johannesburg. They put her onto a scheme where the default hospital group has many hospitals in Johannesburg but few in Cape Town where she lives. She now has to travel 60 kilometers to go to the hospital to have her baby or face a large copayment.
Each medical aid has different lists of hospitals ranging from government hospitals to luxury private hospitals. Each scheme has got its own definition of the different types of hospitals. What you need to do is identify the hospital that you would like to go to. Then choose the scheme type that offers that hospital at the right price.
Day to day benefits
The next benefit you need to look at is the day to day benefit. This typically covers medicines, and visits to medical professionals. Things can get murky here but in essence it is a savings account that you pay into each month. When it gets exhausted you will have to pay for the benefits yourself. You will have schemes with low premiums and low limits before you have to pay for the doctor and medicine benefits yourself. You will have others with higher premiums and higher levels of cover. You need to make a call as to which type of scheme suits your cashflow.
Chronic
Chronic medicines must also be factored int the decision-making process. Many medical aids offer three types of chronic medication supplier at three different prices – any supplier, a network supplier and the state. If you or any members of your family are on chronic medication you should choose a scheme that uses the network or any – you do not want to spend time queuing at the clinics each month. If no one uses this benefit, then choose the cheaper state benefit but with the option to upgrade to a better option at the time of the annual review. Should you need to go onto chronic medication then you can move on to a higher-grade chronic medication benefit structure when the scheme comes up for renewal at the end of the year.
Leisure activities
Your leisure activities impact on your benefit choice. If you are a keen mountain biker then the chances of you needing a decent x-ray and MRI benefit would probably be high. There are schemes which include this as a matter of course and schemes which have high copayments. If your lifestyle is such that you are more likely to use this kind of benefit it would make sense for you to choose a benefit structure that covers this.
Loyalty programmes
Several medical aids have loyalty programs linked to activity levels. It costs money to join these loyalty programs so you need to do at the calculation and see whether your activity level will be such that you will qualify for the discounts otherwise these loyalty programs are not worth using
Gap cover
Medical aids pay their benefits according to a list of tariffs. In many instances, hospitals and doctors charge more than the recommended rate. You can, therefore, find yourself out of pocket. This is where you need to get gap cover. Gap cover pays the difference between what the supplier charges and what the medical aid pays. There are many different types of gap cover and your medical aid broker would be able to identify the right one that compliments the particular medical scheme that you are on. Gap cover is relatively cheap and you may be able to save on your medical aid premiums by choosing a cheaper medical aid and getting the gap cover to make up the difference
Choosing a medical aid is not an easy task. You will need to make tradeoffs to find the sweet spot where the benefits and price work for you. I would recommend that you chat to someone who is familiar with the products offered by all the companies and is not aligned to any particular company. They can help you find the combination of benefits that suits your needs and pocket
Kenny Meiring MBA CFP ® is an independent financial adviser. You can contact him on 082 856 0348 or at Financialwellnesscoach.co.za Please send your questions to kenny@financialwellnesscoach.co.za