Medical aid cover for low-income earners continues to be a contentious issue. The cost of medical aids in South Africa means that it is unaffordable for most low-income earners and up until a few years back, any portion of the medical aid premium that was subsidised by the employer was liable for tax. However, even in cases where an employer is prepared to pay as much as 50% of the monthly premium, low-income earners find it difficult to spare the extra cash from their already limited earnings to pay for medical aid cover.
If you are a low-income earner, it is still possible to afford some level of medical cover with careful planning and budget cuts. There is no doubt that medical aid is an essential cover if you do not want to be at the mercy of the public health care system. However, medical aids are costly and a cheap medical aid may not provide you with the level of cover that you would expect. Many low-income earners are still awaiting the National Health Insurance (NHI) scheme but it is unlikely to come into effect anytime soon (2010).
Low Income Plans
Most medical aids are now providing budget plans that make it affordable for low income earners. These plans provide cover for essential hospital procedures and a limited day-to-day benefit only at selected doctors, clinics and hospitals (network facilities). While it does not offer the same flexibility and benefits as comprehensive medical cover, it still proves to be a useful option for low income earners.
These plans will allow you a specific number of visits to a clinic or doctor of the medical aid’s choice. Only generic medicines may be paid for and additional benefits like eye glasses may not be paid for at all. These plans will only allow members to go to certain hospitals owned by a particular hospital groups. The benefits on these plans are very restricted but the advantage to the member is that in the event of life threatening conditions that require hospitalization and surgery, even the low plan medical aids will cover these costs in most instances. This varies among different medical aids but the carefully regulated medical aid industry means that the cover will be there to protect you when you need it the most.
Sick Benefit or Low Cost Medical Aid
Some companies offer a sick benefit. Here a private doctor is paid a set amount every month to service the employees of a specific company, either on-site or at a nearby facility. The doctor may not be an employee of the company but is rather contracted as a service provider. The advantage of the sick benefit system is that it is often paid for fully by the employer with no cost to the employee. Some medicines may be paid for or the employee will have to pay for it themselves. However it limits the patient’s choice and does not cover hospital procedures.
A low cost medical aid option is still a better choice. If your company provides this type of sick benefit, then you can opt for a low cost hospital plan only. The sick benefit will cover you for your day-to-day medical needs and the company doctor can hospitalize you if necessary. A low cost medical aid plan will also ensure that your family is covered for hospital benefits even if they are not part of your sick benefit cover. Even if your employer is not prepared to subsidise the cost of of a low income medical aid, you will receive a tax benefit for paying for these plans from your own pocket.
If you are planning to switch to a low cost medical aid from a higher plan, you must be aware of the restrictions and extent of benefits. Some medical aid companies do not allow high income earners to join these low cost plans. The benefits between a higher plan with comprehensive benefits and a low cost medical aid is significant difference. If you are trying to cut your medical aid expense by switching to this plan, you will ultimately only get what you pay for. Rather speak to your broker about an affordable medical aid option.