Medical aid is an important cover that is more often required as you get older. Chronic conditions are more likely to arise in your senior years. Therefore your health care needs grow exponentially, at a time when you may be a pensioner with a limited income. The issue of affordability always arises in retirement and balancing your income with your medical aid costs can be a difficult situation. Fortunately several medical aids now offer lower cost plans for pensioners with a restricted income.
Whether you are searching for cover for yourself as a senior citizen or need medical aid for elderly relatives (parents, grandparents or in-laws), the cost factor is always a hurdle. Pensioners are particularly disadvantaged and without financial assistance from family members, medical aid cover for senior citizens may be impossible. However, there are several factors to consider to afford medical aid as a pensioner and ensure optimum cover for one’s needs as a senior citizen.
Medical Aid when Retired
If you have been a member of a company medical aid, you will have to prepare for the fact that your employer will no longer be subsidising your monthly medical aid contributions. However, speak to your employer before making any assumptions as some companies may have individual policies on post-retirement medical aid funding. This may mean that you as a pensioner will have to now bear the entire cost of the medical aid premiums.
Unfortunately this happens at a time in life when money is tight and you have to consider other factors like how long will your pension or retirement annuity sustain you if you live longer than expected. The one advantage of being on a company medical aid, especially if it was a restricted medical aid (refer to the list of medical aids to check which schemes are open or closed/restricted) is that the entire scheme may be subsidised by the employer or sector of industry.
While restricted medical aids are only available to employees of a specific employer or sector of industry, you may be allowed to remain on this scheme despite that fact that you are no longer active in the company. It would therefore be unwise to leave this type of medical aid unless you can be sure of cover on a cheaper medical aid with the same level of benefits. Some medical aids are only for professionals in certain fields or with specific qualifications.
Why is medical aid for seniors so expensive?
The same medical aid plan costs the same price for any South African, irrespective of income level or health status. However, medical schemes may add a late joiner penalty (LJP) on top of the monthly premium. This penalty fee is only applicable to new members who join a medical scheme after the age of 35 years. It does not apply to any person who is not liable for a late joiner penalty and switches between medical schemes.
The late joiner penalty is not a set fee. The penalty varies based on your age at the time of joining the medical scheme. It also consider the number of years of previous medical aid cover. While pensioners may find the late joiner penalty to be exorbitant, it is important to understand why medical schemes have these rules in place. Medical schemes do not discriminate on age but have to content with the financial implications of older members.
Medical schemes pool the monthly contributions of all members. Schemes then pay out for healthcare bills of those members who require medical care. In this type of system, younger and healthier members claim less. Older member naturally claim more often and usually for higher amounts. Therefore the young members subsidise the healthcare costs of older members and those with greater medical needs.
When a senior citizen joins a medical aid later in life, then he/she will be unfairly drawing from the members’ pool without contributing towards it for preceding years when they were younger and healthier. Therefore the late joiner penalty mitigates some of this loss to the medical scheme and its members who have been contributing to the scheme since early in life.
Affordable Medical Aids for Pensioners
There is no medical aid plan that offers you cheaper rates for being a senior citizen. If you do not have medical aid cover from earlier in life, you may now have to pay a late joiner fee on top of your monthly medical aid contributions. However, most schemes are now offering low cost medical aid plans for South Africans who earn under a certain threshold. Pensioners may qualify for these type of medical aid plans.
It is important to note that these plans, while affordable, may have restricted benefits. Usually the members can only use designated network providers, which means only certain hospitals, doctors and other services that fall within the plan’s approved network. It can be an inconvenience if there are no qualifying providers within the area. Pensioners may be further inconvenienced by the cost of travelling to a network provider.
Another way to keep medical aid affordable as a pensioner is to opt for a lower plan with the same medical scheme. Downgrading your medical aid at this stage of life may be the only option if you want to continue cover. However, it is also the period of life when you will need more benefits and it is difficult to decide as to whether to change plans at this stage.
Switching to a hospital plan on your medical may be something to consider as most hospital medical aid plans (not hospital cash back plans) offer chronic cover as well, which is essential in the senior years. However, you need to be aware of the fact that a hospital medical aid plan will not cover your day-to-day medical expenses, like doctor’s consultations, acute medicines and tests and investigations that are done on an outpatient basis.
Other Medical Cover for Senior Citizens
Senior citizens may have to consider other options if they cannot afford to stay on their own medical aid. One option is to become an adult dependent on a relative’s medical aid, like your adult child. This can only be done if you are a financial dependant of your child. However, the late joiner penalty can still make this too expensive and downright unaffordable in many instances.
Most senior citizens would rather not burden their adult children and rather opt for their own medical aid cover. Ultimately this means settling for cover that has lower benefits. Fortunately medical scheme’s are regulated to provide certain essential services, irrespective of clan type. This is known as prescribed minimum benefits (PMBs) and is only applicable to medical aid, not other types of health insurance cover.
There are many good reasons not to give up medical aid with the view of starting cover again later in life when you need it. Also speak to your financial consultant as certain financial service providers offer savings plans which are intended to serve as a method of pre-funding your medical aid contributions before you retire. This usually needs to be started before retirement and will only take effect once you retire.