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What is health/medical insurance and how does it differ from medical aid? Understanding the differences between these two forms of medical cover can be quite confusing, which is why Bloom Financial Services, one of the country’s leading health insurance brokers, has taken the time to outline the key differences between the two types of cover so that you can make an informed decision, based on the facts, about what type of medical cover would suit you best.
What is health insurance and how is it different from medical aid?
Health insurance, or medical insurance, is an alternative to a medical aid scheme. Medical insurance plans cover a list of preselected benefits with a monetary value attached to each of these while a medical aid scheme, in contrast, charges its members a monthly premium for a set of standardised minimum medical aid benefits. When it comes to reimbursing claims, health insurance usually settles the claim with the member, who is then responsible for paying their respective service providers. Medical aid, however, tends to settle the bill directly with the medical service provider.
What is better: health insurance or medical aid?
Health insurance has definitely proven more cost-effective and affordable than most medical aid schemes. This has allowed many South Africans from the lower-income bracket or those who simply didn’t have the budget, access to top-quality, private healthcare facilities and services. However, health insurance remains better suited for day-to-day medical expenses and usually provides limited hospital cover, focussing more on accident and emergency cover, which is serviced through its network of approved medical providers. Medical aid schemes are able to provide more in-hospital cover for surgical procedures and medical treatment but this is subject to the medical aid member’s particular plan as the restrictions will determine the type of benefits they receive.
Key features of health insurance:
- Governed by The Financial Service Board
- More affordable than medical aid but offers less cover in-hospital cover
- Payments are made directly to the health insurance plan member, who must then settle with their respective healthcare providers
- Medical cover is only provided for certain types of illnesses, injuries or procedures as cover/benefits depend on the member’s health insurance plan
- Benefits have their own individual waiting periods
- Can include additional benefits, like accident and emergency cover, maternity lump sum benefits and death/funeral cover
Key features of medical aid
- Governed by The Council of Medical Schemes and The South African Medical Schemes Act
- Medical cover is based on the medical scheme tariff
- Payments are usually made directly to the healthcare service provider
- There are fixed monthly fees
- There is a standardised prescribed minimum benefits list
- Does not include additional benefits
- There is a waiting period for the overall medical aid cover
- If there is a shortfall, the member will be required to cover the price out-of-pocket or through additional medical cover, like GAP Insurance
What are the waiting periods?
Medical aid has a waiting period of up to three months with a claims’ exclusion period of up to 12 months for a pre-existing condition. Health insurance plans also have a waiting period but these are dependent on the particular benefits for which a member is covered so the waiting period will differ from one product to the next.
What is the cost?
Medical aids will charge their members the same premium for the same plan while health insurance premiums will differ according to the benefits a member has selected.
Bloom has partnered with Momentum Health4Me to provide affordable medical insurance plans.
In order to qualify for cover, a member needs to earn less than R30,000 per month. The Health4Me Bronze, entry-level health insurance plan starts at just R395 per month.
What type of cover or benefits will you receive?
Health insurance members choose their cover from a list of benefits that suit both their budget and their particular medical needs. This is known as the building block method, which means health insurance is more flexible in its approach than most medical aid schemes. Medical aids are obligated to provide a prescribed list of minimum benefits to its members, which includes a range of life-threatening emergencies and 26 chronic medical conditions. So medical aid offers more cover while health insurance provides limited cover, which is covered as a rand value per day, or as an overall monetary limit per year.
Health insurance also offers less in-hospital cover than medical aid, which it limits to accident and emergency care, like a vehicle crash or a heart attack. Should a health insurance member require a surgical procedure, they will first need to provide the hospital with a guarantee of payment letter before being permitted admission. A medical aid scheme will provide more comprehensive hospital cover for a range of different in-hospital treatments or procedures but this is limited to the restrictions set out by the member’s particular medical aid plan.
How to decide which type of medical cover is right for you
Health insurance is suitable for those people or families who have financial constraints and wouldn’t be able to afford private healthcare otherwise. However, if you or a member of your family have a serious healthcare condition or a chronic condition, or if you know that you’re likely to require hospitalisation in the near future, then a comprehensive medical aid plan may be more suitable for you. Health insurance is definitely more affordable than medical aid, and it allows for more flexibility than a rigid medical aid plan but one must be mindful of the fact that there is less in-hospital cover and that it’s more suitable for day to day benefits.
Whether you’ve opted for medical insurance or health insurance is your personal choice. What’s important is that you’re covered for quality medical services should you ever require them. If you’re interested in finding out more about some of the best health insurance in South Africa, contact Bloom’s office and a trained consultant will discuss the various health insurance plans available.