Many medical aids now offer a medical savings option on some plans which fund day-to-day medical expenses but can also be used to supplement any in-hospital costs that are not covered by your medical aid. Unlike the predefined day-to-day limits or insured out-of-hospital benefit, a medical savings account does not expire at the end of the year and can be carried over to the next year of cover.
Types of Medical Savings Account
Different medical aids offer various types of medical savings account all of which serve the same purpose – to fund your medical expenses.
Some medical aids have a standalone savings account which is the only source of cover for your out-of-hospital benefits. This means that all your day-to-day medical costs like doctor’s consultations, acute medicines, blood tests and x-rays, as well as treatment by auxillary health professionals, will only be covered within this amount. Although you are contributing to your medical aid premiums on a monthly basis, your medical aid may provide you with access to six months or one year’s worth of the savings. This does not apply to every medical aid though and it is important to speak to your medical aid and find out how they will manage your medical savings account.
Other medical aids offer an optional savings account to an existing day-to-day insured benefit. In this case, your medical aid provides a set limit for out-of-hospital costs but the member can add on a savings account to supplement medical costs. If you day-to-day benefit is exhausted or does not cover certain fees, the amount will then be paid for from your savings account.
A few medical aids offer special plans for your savings account where the medical aid will supplement part of your medical costs if your savings account is exhausted within the year. This is only applicable if you meet certain criteria like reaching a threshold benefit before the medical aid takes over your medical costs.
Advantages and Disadvantages of a Medical Savings Account
The days of massive out-of-hospital (day-to-day) benefits are gone as more medical aids are under financial strain. The medical savings account is a way of putting the responsibility of managing one’s day to day medical costs in the hands of the patient. By allocating a portion of the monthly medical aid contribution to the saving account, which is a maximum of 25% of your monthly premium, members are aware of the amount at their disposal and can be more prudent about the out-of-hospitals that they incur. This also discourages fraudulent activities by the medical aid member.
While medical aid members may complain that a medical savings account is nothing more than paying for medical expenses from their own pocket, it does have some benefits if you are on a company medical aid. In this case, your employer is subsidising a portion of the monthly medical aid contribution, which includes the portion of the funds that are going into your savings account. This part contribution is not money that you have in your hand and your employer would not have included it as part of your take-home salary. However, the funds in your savings account can be used for many medical expenses that you may have had to pay for in cash.
Some medical aids offer an additional safety net benefit if you exhaust your medical savings account. This is sometimes called the threshold benefit. Once you exhaust your medical aid savings account, you will have to pay for the rest of your out-of-hospital expenses up to a certain limit known as the threshold benefit. From this point onwards, the medical aid will cover your out-of-hospital expenses even though you no longer have any funds in your medical savings account.
The bottom line is that a medical savings account means that a medical scheme does not have to carry the risk associated with the insured day-to-day benefit. It puts the responsibility in the hand of the medical aid member and may restrict the access to health care once the funds are exhausted. Since a the amount contributed towards the savings account is restricted to a portion, usually 25%, of the total monthly premium, a person who may incur greater costs in the year will not be able to contribute more funds towards the savings account.
Some medical schemes only allow access to the funds that are available in the savings account with no access to future benefits. The cash-strapped medical aid member may have to wait till there is sufficient funds available in the savings account before incurring any medical costs. This may mean having to wait for sufficient funds to be available before seeing a doctor or going for a blood test and or the member will have to pay for these fees in cash.
How to Save on your Medical Savings Account
- Be aware of the amount available in your medical savings account on a regular basis. If you know how much you have, you will be aware of how much you can spend and where to save.
- Your medical savings account reimburses service providers at the NHRPL tariff. Speak to your doctor about a cash fee as this may be lower than the NHRPL tariffs. In this case you can pay your doctor in cash and claim back the amount from your medical savings account.
- Avoid unnecessary shopping at a pharmacy for vitamins and minerals that may be paid for from your medical savings account. Choose supplements that are really necessary and pay cash for it or shop at supermarkets that sell these same products at lower prices.
- Do not conspire with any medical service provider to defraud your medical savings account. Ultimately you are ‘stealing’ money from yourself and medical aid fraud is a crime.
- Dental costs are among the more expensive costs incurred on an out-of-hospital basis. Regular visits to your dentist and good dental care can prevent problems before they start and save you from spending large amounts on costly dental procedures.