Do I really need my medical aid?


While the government makes noises (or is it threats) about national health insurance, we are still left with the old system of state hospitals, which in theory are for everyone, and private medical care for those with the money to afford it.

Most of us mere mortals who can afford it, or are lucky enough to get it as a benefit from your job, afford private medical care (or at least part of it) via medical funds.

I specifically mentioned in last month’s column that I would expand on it this month, and well, promises make debts.

Now, I have to say this at the outset: medical funds, and the regulations around them, are complex and technical. It’s about as overwhelming as the rules that dictate a loose scrum.

The thing is, people like medical aid and their premiums about as much as they would like contracting leprosy. Unlike leprosy, you can still argue that it is medically necessary. It’s not that our government hospitals are so rotten per se (not in every case), but getting treatment is not without its challenges.

And for every story of someone who tells you how grateful they were for their fund, there are those who can tell you how their fund didn’t pay for something.

I want to underline again, medical funds and the regulation therefore are complex, and the one who knows exactly what the practical impact of the NGV would be (should it be implemented), is whether Siener van Rensburg’s direct descendant, or shooting bacon.

It’s also the case that this topic could take up entire books – I can’t go into excruciating detail with my word limit. So if you have never believed me, believe me this time, for your own good: go see an expert who can give you advice about your specific situation.

Guess, here we go.

Medical is kind of medical

Of course there are big differences between closed and open medical funds, or big and small, and of course there is a difference between the state’s fund and private funds.

However, the purpose of all of them is the same: to protect you and help pay if large medical expenses roll your way. In a way, it’s like a wood braai versus a kettle braai – both will cook your food broadly in a smoky way, but there are quite a few differences as well. However, the goal remains the same – to give your food that barbecue flavor.

Also note that a medical fund is not the same as insurance – it’s a nuanced difference, like the one between cognac and 10-year brandy, but a very important one (more on this later).

It is obviously also the case that there is a lot, a lot of detail, and one cannot simply ignore it.

About that detail

As mentioned above, funds differ – the nature of a closed fund, which for example only covers accountants, versus an open fund which tries to convince everyone to be fitter, is of course different.

So is the state’s medical versus one aimed at professionals. Also so-called “full” medical versus a hospital plan and there are also funds you get through your job (which may not be standard options), versus what you can take out as an individual.

But they are also closer than you might think.

Without going into too much of the legislation and finer points, I must mention what are known as prescribed minimum benefits (prescribed minimum benefits), or PMBs. PMBs are a list of conditions for which medical funds must cover a certain minimum treatment. Think here of serious or chronic things, like cancer, or diabetes, or certain psychiatric conditions, or cholesterol.

Regardless of the fund you are on, they have a certain legal obligation towards you. This is one of the reasons why funds’ premiums are so expensive.

This does not mean that everything – including new breakthrough treatments – is covered, but you have some cover for these things, regardless of what you are on (provided it is a medical fund, and not medical insurance).

The big difference is in the breadth of coverage, and well beyond PMBs. “Full” medical usually has a savings plan component, or divides their coverage pool into baskets (for example, so much for acute medicine, and so much for optometry and so on).

They also usually cover other things, say MRI scans, at higher rates than hospital plans. And they usually have other things in addition – broader prenatal benefits, you name it.

With hospital plans, acute medicine and doctor’s visits are usually for your own pocket, just as new tires for your Hilux are for your own pocket (even if it’s the rotten roads that chewed up your old tires).

There will probably be holes on the full and hospital fund side, but hopefully less on a “full” medical. In both cases, you should be well covered if you need to be hospitalized.

The difference between companies is not necessarily as great as the difference between rice and travel – some companies offer more comprehensive cancer cover, others allow you to change your option in a year. Some, again, have extensive networks where you can get cheaper rates. Others offer better benefits for people who are pregnant.

What you need depends on your needs.

What else do I need to know?

Medical funds get a lot of criticism because they are considered expensive, but if you compare that premium with the cost of, for example, a heart bypass operation or how cancer can swallow your money, it is actually small.

There are many reasons for the high costs and many fingers can be pointed in many directions, but one of the big factors (besides the ones mentioned above) is that a fund cannot refuse someone.

Unlike with insurance, you are not actually underwritten. Yes, they can give you a so-called late joining penalty (late joiner penalty) give if you join any medical for the first time at say 50 (which can make it damn expensive).

And yes, they can exclude certain conditions for up to a year, even PMBs. But they cannot refuse someone. So if Vet Flip first joins at 50 and then two years later is knocked down by diabetes type 2, they will still cough and pay. And if he survives another stroke afterwards, he can continue paying premiums until he is 70, and they will not break even with him yet.

The poor 25-year-old Fikse Fransien with no medical conditions is actually cross-subsidizing Frik.

Medical funds and hospital plans are also strictly regulated – they must have certain cash reserves, for example, and a whole string of other requirements that are deeply technical.

It’s more complex than “the funds and doctors just want us to smoke”, or that your broker just wants to make a commission (your broker only gets a maximum of R100 from that premium).

Take home message

Now this was a mouthful, and we hadn’t even really started stirring the water yet.

It’s complex, is what I’m saying (again). And I know I sound like a record that gets stuck, or the Proteas hope peddlers who promise that this time they will win the cup, but go see someone who can help shed light on this.

However, the most important thing is this: I think any medicine is better than no medicine. Get the broadest you can for your budget, and just make sure they have cash reserves to pay claims.

Yes, it’s expensive, but you know what’s more expensive? To bear those costs yourself.

  • Leon-Ben is a financial advisor, writer and musician from Wellington.
  • This series of columns follows from the community research of Solidarity Helping Hand. Visit Helping Hand’s website to download the full research reports.
  • Also read “Most SA’ers use a third of salary for debt” on RNews.