The past two years (2008, 2009) have seen a few small medical aids in South Africa becoming insolvent and filing for dissolution before the year end. This has left their members in the lurch, despite promises to pay outstanding medical bills to doctors and other practitioners. While medical aid members may claim to be ignorant, the warning signs should be evident to any attentive member. In these cases, it is best to switch over to a more stable medical aid rather than waiting for your medical aid to go bust.
Change of Administrator
A medical aid may change administrators many times during the course of its existence. This may be due to financial or management issues. However if your medical aid switches over from a large reputable administrator to a smaller administrator, then this should raise the alarm bell. The reason may not always be due to financial issues. Some medical aids opt to handle their own administration or use a smaller administrator that may be able to provide a better service. However this can affect your medical bills and some doctors may refuse to deal with a specific administrator who is known for inefficiency and late payments.
Slow Processing Time
Most medical aids in South Africa will process a doctor’s claim within one to two weeks of receiving the claim. Some of the larger medical aids may process these claims within one to two days and pay your doctor the following week. If you find that your medical aid has now slowed down in the processing times, this can indicate a cut back in staff, poor management or a purposeful delay on payouts. These should raise some questions on your end. However if there are other reasons for late payment on the odd occasion then this does not necessarily reflect on your medical aid’s financial position.
Medical Aid Reserves
Your medical aids is required to have a reserve of approximately 25% for it to be considered financially sound to continue business. Simply this means that your medical aid must have sufficient funds to cover approximately 25% of the claims it may face in the coming year (based on the previous year’s payout). This helps to protect members against medical aids that are not financially stable. The larger and more stable medical aids will have more than 25% reserves and it is your right to ask your medical aid about their financial situation. Any medical scheme that attempts to hold back the payment of your claims or not process claims in a bid to make there reserves seem higher than it actually is may be a sign of trouble. Most medical aids will swear that this is not the reason for late payments and delayed processing but these ‘conspiracy theories’ persist.
Call Centre Staff
The call centre staff is a reflection of your medical aid in terms of their professionalism and capability. If your medical aid is cutting back on staff despite high call volume, has changed to less efficient and unprofessional staff then this could be as a sign of poor management or even financial difficulty. The biggest medical aids in the country have efficient staff who are professional and able to assist you. You may have to wait for a period of time to reach a representative but they should be adequately trained to handle your queries.
Spikes in Premiums Amidst Reduced Cover
Medical aids try to keep the annual premium increases as low as possible. Depending on the economic climate, the medical aid rates may vary. If your medical aid is suddenly charging you more than the industry average or is reducing payment of certain services, then these may be warning signs of its financial instability. Phone other companies and compare medical aids.
Ask other schemes about their annual price increases over the preceding years and about their benefits. If your medical aid now refuses to pay for a chronic drug that you have used for years or have switched you over to a cheaper alternative (not just a generic), then query with other medical aids if this is also their policy. A significant discrepancy between price, benefits and policy should be a cause for concern.
Safe Medical Aid
A financially secure medical aid will :
- Provide additional perks and benefits to its members at minimal rates.
- Have efficient staff who can help you with your queries.
- Not increase premiums above the industry average.
- Pay you or your doctor on time and without any hassle.
- Not change administrators or policies each year.