MEDICAL INSURANCE VS MEDICAL AID
The most contentious issue discussed by South Africans looking for affordable, yet valuable medical cover is: what is the difference between medical insurance and medical aid?
Many people want to determine which one is better, but it is important for us to note that the two products have unrelated pros and cons. These differ significantly in many aspects. However, they have the same fundamental purpose: to help patients cover the high costs of private medical care.
Some may argue that even though medical aid is more expensive, it is more valuable as it tends to cover a wider range of ailments and pay for more treatments, especially in-hospital. On the other hand, many will argue that medical aid is unnecessarily costly, and that medical insurance is a cost-effective alternative bridging the gap between people and affordable healthcare. Essentially, it comes down to suitability. When deciding, remember to ask the necessary questions regarding your medical needs to see which option is more suitable.
Your right to quality and affordable healthcare is upheld by the Amendment to the Demarcation Act. This differentiates medical insurance from medical aid as follows:
THE LEGAL FINE PRINT
Due to Demarcation Regulations implemented by the Council of Medical Schemes, medical insurance is being aligned with medical aid. The Demarcation Regulations came into effect on 01 April 2017, due to medical insurance being identified as a cover option that conducts the business of a medical scheme, but does not substitute a medical aid because it remains an insurance contract outside the rule of the Medical Scheme Act, 1998 (Act 131 of 1998).
This means that medical insurance gives you products that resemble the features of those provided by medical aid, with the important difference being low cost specific stated benefits that are designed to keep your premium affordable.
Medical insurance focuses more on major life events, such as a stroke or heart attack. The majority of the time it excludes pre-existing conditions. It also covers accidental injuries, paralysis or illnesses that might occur after you have taken out the insurance. In such events, the medical insurance will pay out in the same way that your car insurance would if your car got stolen. Both options will pay the healthcare provider directly, however medical insurance may also pay out a set amount into your personal bank account, depending on the plan and the insurer. This money can either be used to assist you in paying the full bill or reimburse an upfront payment.
In contrast, a medical scheme is regulated by the Medical Schemes Act of 1998 and is required by the law to pay for the treatment of a list of 270 prescribed minimum benefits (PMBs). This is applicable to patients who have an expensive comprehensive plan, or a normal hospital plan. Medical Aid schemes are also liable to pay for the treatment of 26 chronic conditions. Medical Aid pays in-hospital benefits according to the National Recommended Price List limiting benefits according to the particular plan while medical insurance offers stated benefits in accordance with policy terms.
WHAT ARE THE SIMILARITIES BETWEEN MEDICAL AID AND MEDICAL INSURANCE?
- “If you have a pre-existing condition, it makes no difference which option you have because both policies will have a similar waiting period applied before you can claim benefits to cover treatment for that specific ailment.”
- Both require a monthly premium, exclude cover for certain conditions, and apply waiting periods for chronic illnesses and medication benefits.
- Day-to-day, hospital and combined cover are offered by both products.
- Both require pre-authorisation for hospital cover and GP referrals for specialist visits.
- Most medical aids will have a prescribed list of doctors and hospitals while medical insurance may have a list of network GPs and Dentists nationwide but isn’t necessarily affiliated with any specific network of hospitals or specialists.
- Both options cannot refuse membership on any grounds to any applicants.
- Medical aid and medical insurance also may not terminate membership for any reason other than unpaid premiums and fraud.
- 30 days notice must be given for the termination of policies.
- Instead of changing the scheme, a member can either upgrade to a higher benefit option in order to get more comprehensive benefits or downgrade to a lower benefit option, for more affordable premiums.
