Medical aid can be quite a costly cover and the monthly contributions may consume a significant amount of your income depending on your level of cover. If affordability is an issue, you may consider switching to a cheaper medical aid plan or opting for one of the low cost medical aids. However, other financial products that provide benefits for medical conditions or as a means to cover your health care costs are not able to match the flexibility and protection of a medical aid.
Hospital Cash Back Plans
Hospital cash back plans have become a popular insurance cover these days. The extensive yet vague marketing of these products often create confusion about these products. A hospital cash back plan is NOT a medical aid. It cannot be used to replace medical aid cover and it will not be accepted by private hospitals and doctors as a guarantee of payment should you fall ill.
Hospital cash back plans however, are useful back up products should you need to replace the income you lose while being in hospital. The payout from a hospital cash back plan can also be used to cover any bills that your medical aid may not pay for.
Medical insurance products have existed for quite a while in one form or the other. These days, many types of medical insurance products are banded together under a single product to provide protection against certain medical events. The products differ among insurance providers but generally include a hospital cash back plan with other additional benefits like guaranteed lump sums upfront for admission into a private hospital. It may also incorporate insurance products like accidental disability, dread disease, physical impairment cover and life insurance. Some medical insurance products also include gap cover which is described below.
While medical insurance does pay out for medically related events, it is not a medical aid. Health insurance, which is available in other countries, is an insurance product that is similar to a medical aid in that it pays for medical bills incurred in hospital or with certain out-of-hospital services. Medical insurance in South Africa is not the same as private health insurance in other countries. However, the National Health Insurance (NHI) that is being proposed by government will offer many benefits that are similar to medical aid, not medical insurance.
Gap Cover for Health Care Costs
Most medical aids pay according to the National Health Reference Price List (NHRPL) rate for medical services. This may be lower than what some medical specialists may charge and you will be held liable for the amount that is unpaid by your medical aid.
With gap cover, the insurance provider will pay the difference between the NHRPL rate covered by your medical aid and the fee charged by the doctor or hospital up to a maximum of 3 to4 times of your the NHRPL rate. This varies among different insurance providers.
For example, if your doctor charges you R1,000 for a consultation and procedure but your medical aid only pays the NHRPL rate of R300 for this service, gap cover will pay for most, if not all, of the R700 difference.
Medical gap cover is not a medical aid. It is to some extent an alternative to a more expensive medical aid that will cover 300% of NHRPL rates. Terms and conditions are applicable but gap cover is more of a safety net against exorbitant medical costs should your medical aid not cover these bills in full.
Despite the variety of health insurance products, none of these can replace a medical aid. Giving up medical aid cover to opt for one of these products is risky. Instead the range of health insurance products mentioned above should be considered to supplement your cover with a medical aid.