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Medical Aid Scheme Cover 𝒗𝒆𝒓𝒔𝒖𝒔 Health Insurance

Understanding the differences between medical schemes cover and health insurance can be quite confusing, which is why we’ve provided an easy guide to help you make an informed decision about which cover would suit your particular needs best.

Medical Aid Scheme Cover

  • Is a form of insurance. In exchange for a monthly contribution or a premium, you get financial cover for medical treatment you may need, as well as any related medical expenses.
  • There are two kinds of medical schemes, namely, open and closed (restricted) schemes. Any person can join an open scheme, but closed schemes are for the employees of specific employer groups or membership of a particular profession, industry, association or union.
  • Medical schemes, therefore, help you to pay for your healthcare needs, such as medical expenses related to doctor’s visits, nursing, surgery, dental work, optometry, medicine and hospital accommodation when needed.

Health Insurance

  • Is a type of insurance coverage that pays for medical, surgical, and sometimes dental expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly.
  • The benefit could either be a fixed sum of money per day, or a maximum lump sum of money which is paid if a specified health event takes place (e.g. a specific health condition develops).
  • Health insurance policies usually only pay out if certain specific health-related events happen and do not pay your medical expenses as a medical aid scheme would.

Unique Principles

Medical Schemes

  1. Open enrolment

All registered open medical schemes must enroll any person who wishes to join the scheme. They may not discriminate against any person who wants to join a scheme and is able to pay the monthly membership contributions.

 

A registered medical aid scheme therefore cannot reject an application. Although medical aid schemes enroll any person, they can impose certain waiting periods on new members and/or their dependents when joining a medical aid scheme. Waiting periods depend on the amount of time an applicant has been a member of a medical aid scheme at the time of joining a new scheme.

 

There are typically two kinds of waiting periods: A general waiting period of up to three months is imposed when changing between medical aid schemes: During this waiting period, members must pay their normal monthly contributions but are not entitled to claim any benefits for a three-month period unless where an exception for Prescribed Minimum Benefits (PMBs) applies (Sec 29A (3).

 

The condition-specific waiting period of up to 12 months: During this period, members must pay their normal monthly contributions. Any pre-existing health condition(s) (as identified during the application) will be excluded and all associated medical costs during this 12-month period will be for the member’s own pocket, unless where an exception of Prescribed Minimum Benefits (PMBs) applies (Sec 29A (2).

 

Medical aid schemes can also choose to charge a late joiner penalty. Late-joiner penalty is a penalty fee that the medical aid scheme may impose on any person who joins at age 35 and above.

 

  1. Prescribed Minimum Benefits (PMBs)

Prescribed Minimum Benefits (PMB) are a set of defined benefits to ensure that all medical aid scheme members have access to certain minimum health services, regardless of the benefit option they have selected. The aim is to provide people with continuous care to improve their health and well-being and to make healthcare more affordable.

 

PMBs are a feature of the Medical Schemes Act, in terms of which medical aid schemes must cover the costs related to the diagnosis, treatment and care of:

  • any emergency medical condition;
  • a limited set of 271 medical conditions (defined in the Diagnosis Treatment Pairs); and
  • 25 chronic conditions (defined in the Chronic Disease List).

 

A registered medical aid scheme cannot exclude any medical condition that was not diagnosed or treated in the 12 months prior to applying to join the scheme. E.g.: If a beneficiary contracts HIV after the three-month general waiting period, the scheme must cover the costs related to the virus.

 

If the scheme imposed a 12-month exclusion on a particular medical condition and the 12-month period has lapsed, the scheme is liable to cover the condition.

 

  1. Community rating

Registered medical schemes are not allowed to charge members varying contributions for the same plan unless such contributions are based on the level of income of the applicant and/or number of dependents. In other words, persons with a lower income may pay a smaller membership contribution, and the scheme may charge less per person if the main member has more dependents.

Health Insurance

  1. Limitations and prohibitions

A hospitalisation policy may not cover medical expenses.

A health policy, other than a Gap cover policy, may not require the policyholder or insured person to be a member of a medical aid scheme.

 

  1. Waiting period

A hospitalisation policy, gap cover policy and HIV/Aids, tuberculosis and malaria testing and treatment policy may provide for a –

  • general waiting period of up to 3 months; and
  • condition-specific waiting period of up to 12 months.

An insurer may not impose a condition-specific waiting period on a policyholder’s health insurance policy if that policyholder, for at least 90 days before entering into a health policy with the insurer, had a health policy with materially similar benefits and had completed the condition-specific waiting period in respect of that health policy.

Where a waiting period of a policyholder under a previous health policy had not expired at the time that that policyholder enters into a new health policy with materially similar benefits, the insurer may only impose a waiting period equalling the unexpired part of the waiting period in respect of that previous policy.

 

  1. Disclosure requirements

A hospitalisation policy, gap cover policy and HIV/Aids, tuberculosis and malaria testing and treatment policy may not create the impression that it is a substitute for medical aid scheme membership.

A hospitalisation policy may not create the impression that it covers you for medical expenses.

Three areas where Medical Aid Schemes and Health Insurance differ:

Price

For the Medical Schemes, all members pay the same amount depending on the selected plan and number of members (family size).

Health Insurance premiums are risk-rated, and an insurer may require that any policyholder entering into a contract after a specific age pay a higher premium than any policyholder entering into the contract at a younger age, provided that all policyholders with the same age pay the same premium.

Hospital & Chronic Benefits

Medical Schemes provide comprehensive coverage for dreaded diseases; and are accepted by most private hospitals (elective and emergency) depending on the scheme benefits package, selected plan and pre-authorisation required.

Health insurance provides a limited lump sum or daily rand amount for hospitalisation costs, but it is usually a rand amount of events per year that covers dreaded diseases.

Types of covers

Health insurance covers your day-to-day medical expenses or covers the cost of a specific medical procedure but does not have to provide cover for PMBs but pay out a specified benefit when you suffer from a health event covered by the policy.

Medical aid scheme covers in-hospital benefits according to the National Recommended Price List limiting benefits as per the plan and fully covers PMBs.

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