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, 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 the difference between medical aid and medical insurance?

The main difference between health insurance and medical aid is that medical insurance plans cover a list of preselected benefits with a monetary value attached to each. A medical aid scheme charges 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 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. One of the main medical insurance benefits is that policyholders can save money as they are reimbursed for the costs of a medical illness, condition or event. While the insurance premiums are affordable, the quality of care and services is top-quality, with members gaining access to private medical facilities and healthcare professionals.

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.

Benefits of having health insurance

Health insurance provides several benefits. It offers financial protection by covering a significant portion of medical expenses. It ensures access to top-quality healthcare services at private facilities, including preventive care, screenings, check-ups, and treatments, which improve overall health, and early disease detection.

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.

How does medical insurance work? Key features

Medical insurance will reimburse the member for some of the costs associated with an illness, medical condition or a major medical event, like a heart attack. The member is either paid an amount per day or a lump sum, depending on their type of benefits and health insurance cover.

• 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

How does medical aid work? Key features

• 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 cover.

What is a beneficiary in health insurance and medical aid?

A beneficiary in health insurance or medical aid refers to the person or persons who are designated to receive the benefits of the policy or plan. A beneficiary can be the main member or a dependent, like a spouse, child, or elderly parent. The beneficiary is entitled to receive the benefits outlined in the health insurance policy or medical aid plan, which includes cover for medical expenses, hospitalisation, medication, and other types of healthcare services, like optometry or dental.

What are ‘waiting periods’ in health insurance?

A waiting period in health insurance refers to the time period that needs to pass before a certain benefit or cover becomes available after obtaining a health insurance policy. During this time, the member is not eligible to receive cover for certain services or treatments. The duration of a waiting period can vary from three to six months and will depend on the specific product or benefit.

Why is there a waiting period for health insurance?

The reason why there is a waiting period for health insurance is to prevent people from applying for cover when they intend to claim for a certain medical condition or procedure in the near future. This is the reason why maternity or chronic benefits have waiting period exclusions.

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 R570 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.

Best medical insurance in South Africa

Whether you’ve opted for medical aid or health insurance is your personal choice. Bloom offers one of the best health insurance options in South Africa, scoring a trust index of 10 with HelloPeter. 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.