Medical Aid versus Medical Insurance – Defining the Difference
A common question asked by medical aid members is this: “Should I change from my medical aid plan to medical insurance rather, as there is a significant reduction in the monthly premium?
In order to answer the above question, we need to look at some other questions first:
- What is the difference between medical aid and medical insurance?
- Why is medical insurance so much cheaper than medical aid?
- Can I add Medical Expense Shortfall Cover (Gap Cover) to either one?
Although both plans are regulated by the Council for Medical Schemes, they are completely different.
Medical Insurance is an insurance policy that falls under the Long Term Insurance Act. The benefits under this plan have been limited by the regulations and therefore cannot offer comprehensive in-hospitalisation cover, for every eventuality.
Medical Insurance can only cover you for accidental or emergency-related in-hospitalisation costs, and the benefits for both of these incidents are limited. Some plans provide a limited cash amount based on the number of completed days you spend in hospital. However, the cost of your in-hospital treatment in a private hospital may well exceed the daily benefit you receive under this portion of your policy.
In the event that your Medical Insurance benefit limits are exceeded whilst you are still receiving treatment in a private hospital, assuming your condition is stable, you will be transferred across to a public hospital for the remainder of your treatment.
Medical Insurance however includes cover for day-to-day medical expenses, such as GP visits, basic dentistry, optometry, pathology and radiology. These benefits will have an overall annual limit and are only available from a network doctor.
Medical Aid plans provide more comprehensive in-hospital coverage, for both accidental as well as illness-related incidents, and plans will vary in terms of what you can afford to pay. The majority of plans available offer unlimited cover for in-hospitalisation treatment, but the cheaper options will limit your cover per year. Once hospitalised all charges relating to the treatment you receive will be covered up to the medical scheme’s tariff rate. Should the attending doctor/specialist charge beyond the medical scheme tariff, you will be liable for the shortfall.
Medical Aid plans will also include a list of procedures where a co-payment is applied. This means that in the event that you undergo one of these procedures, you will be liable to settle the co-payment from your own pocket.
Medical Aid plans can include a medical savings account that is there to assist you for any out-of-hospital treatment expenses. The savings account contribution will be added to your medical aid premium and increase your total monthly contribution on your plan.
Waiting periods are found on both plans. Medical Insurance policies may impose waiting periods that are condition or procedure-specific while a Medical Aid will base their waiting periods on your health condition at the time of making the application. The maximum waiting period that can be applied on both plans is 12 months from date of commencement of your policy of plan.
Hospital Expense Shortfall Cover (Gap Cover)
According to the regulations that govern gap cover, only Medical Aid members may apply for a gap cover policy. Those who have Medical Insurance cannot take out a gap cover policy. Medical Aid members therefore have the ability to self-insure against potential financial shortfalls that may occur when they receive in-hospital treatment.
There is a place for both Medical Aid and Medical Insurance in South Africa. In fact, why not allow more competition in this area, rather than over-regulating what few plans we have at the moment? Let the industry design products and let the people decide what they want.