Once you have identified medical schemes that are financially strong and likely to stay that way - which was covered last week - it is time to take a close look at the benefits available and to see if they match your healthcare needs. In this instalment of our series focusing on medical cover, we look at how you select an appropriate option from the range the schemes offer.
Finding the right medical scheme cover for you will depend a lot on your healthcare needs, potential healthcare risks and what you can afford.
Ideally, you should get a good medical scheme broker or adviser to help you, and you should be prepared to spend some time and effort analysing your needs.
A good place to start is to go through all your medical bills for the past five years to determine your average expenditure on yourself and your family, if you have one.
Keep separate lists of hospital bills and bills for day-to-day medical expenses, such as those for doctor consultations, medicines, optometry, dentistry and physiotherapy. If you are already a member of a scheme and have been submitting all your claims to the scheme, your scheme's administrator should be able to help you with a history of your claims.
Make a list of all the ongoing medical conditions for which you need treatment or medication - you or your broker must check how these will be covered by any medical scheme option you consider joining. Then consider your future needs - for example, if you plan to start a family, have just been diagnosed with an illness or have just taken up a dangerous sport that could involve injuries.
As part of this exercise, consider your family's medical history and whether there are any hereditary illnesses that you or a family member may be at risk of contracting. The most common major illnesses are heart problems, cancer and strokes. Also remember that as you get older you are more likely to need expensive benefits.
Remember that you can usually only change options within a scheme once a year in January, and only a few schemes allow changes during the year.
Now you are ready to look at the benefits offered on the various options of the schemes you have identified as being suitable ones and to compare these to your needs.
To help you identify suitable options it is worthwhile knowing the broad types of options within each scheme. Most schemes offer a range of options meeting a variety of needs and levels of affordability. Generally, comprehensive traditional options are the most expensive and network or capitation options are the most affordable.
However, there are a number of variables schemes use to differentiate options and sometimes an option may even have elements of more than one option type.
You need to weigh up what cover you need and what you are prepared to sacrifice to keep your costs down by possibly limiting your choice of providers or accepting responsibility for certain medical costs yourself. For example, you may be prepared to take responsibility for paying your own day-to-day medical costs in return for belonging to a lower-cost option offering mainly just hospital cover.
The option types are as follows:
- Traditional options
Traditional options pay benefits from an insured pool, in line with the benefit schedule for that option.
They range from very comprehensive - and usually expensive options - to low-cost ones that offer limited benefits. A traditional option may have an overall annual limit and sub-limits within this. Others have no overall limit but have limits on certain hospital benefits and sub-limits for various categories of non-hospital or day-to-day medical expenses, such as medicines, consultations and dentistry.
Traditional options may or may not be combined with a savings account (see new-generation options, below).
- Hospital plans
These options typically offer cover for only major medical or hospital expenses, and emergency services such as ambulances. No day-to-day expenses are covered. However, there are no more pure hospital plans because all schemes have to provide cover for the diagnosis, treatment and care of 27 common chronic conditions, which mostly involves out-of-hospital benefits.
- New-generation options with savings accounts
These options offer certain insured benefits - usually those covering hospital and major medical expenses - and you self-fund other expenses by contributing to a medical savings account.
The maximum percentage of your contributions that a medical scheme can allocate to your personal medical savings account is 25 percent. This is in terms of regulations under the Medical Schemes Act and it is intended to ensure that schemes still offer reasonable insured benefits for hospital and other major medical expenses where healthier members subsidise the costs of sicker members.
If your option has a savings account, you accept that the account will cover annual expenses to the specified amount, and you take responsibility for any expenses over and above that.
If you have funds left in the account at the end of year, they can be carried over to the next year. If you leave the scheme and don't join another one with a medical savings account option, the money must be paid out to you.
For medical schemes, the advantage of a savings account for members is that they are typically more careful with funds in their accounts and tend not to abuse them, for example, by buying expensive frames for glasses. As a member you benefit if you get tax relief on the savings account contributions.
The funds in your medical savings account cannot be used to pay for the costs of a prescribed minimum benefit (PMB). These are paid directly by the scheme.
Savings accounts are also used on more traditional options as a means to top up the limited benefits the scheme offers.
- Above-threshold benefits
Some schemes offer medical savings account options that have above-threshold benefits. These benefits can be accessed once you have spent a certain amount on certain claims and exceeded your savings account by a certain amount.
The claims that count towards this threshold are usually what are regarded as essential claims - you cannot therefore spend all your savings account funds on cosmetic surgery and then claim the above-threshold benefits.
The threshold is usually related to the amount members contribute to their savings account in a year. While certain schemes have options with thresholds equal to this amount, others have what is known as a self-payment gap. In other words, the threshold is higher than the savings account benefit and members must pay some of their claims (but not those for PMBs) out of their own pockets before reaching the threshold.
- Network or capitation options
In these options, the scheme agrees to pay certain providers a set amount a month for every member and dependant registered on the option, and the provider in return agrees to provide certain healthcare services. To enjoy cover as members, you and your dependants have to use these providers - which could be hospitals, doctors, pharmacies, dentists, optometrists, pathology laboratories and radiologists - unless you are taken to a different provider in an emergency.
These options tend to be lower-cost ones, but need not necessarily be. Typically they make use of doctor networks such as those run by CareCross or medical centres run by Prime Cure, or the scheme may have set up its own network.
A capitated option will probably restrict you to certain hospitals for hospital benefits. You will be given a list of health care providers - such as doctors, dentists and optometrists - who belong to a network that you must use. Visits to certain providers in the network, such as general practitioners, may be unlimited, but access to others, such as optometrists, may be limited.
You may have no cover for visits to specialists, or limited cover for specialists, or cover for only limited consultations if your GP refers you to another doctor.
Lower-cost network options typically restrict you to using certain medicines on a list that will include generics instead of brand-name medicines, and benefits may extend only to, for example, basic X-rays and pathology tests.
Increasingly, schemes are introducing networks of, for example, hospitals or optometrists, to contain escalating contributions. Agreeing to limit your choice is one way to get more affordable cover.
A new-generation option may, therefore, have a hospital network.
Some schemes offer members the choice of restricting themselves to certain providers, such as hospitals or chronic medicine providers, in return for discounted contributions.
A number of schemes also have networks of general practitioners or specialists, and if you use these practitioners you can be sure your medical bills will be covered in full. Scheme options that offer access to these networks are not necessarily capitated options. The scheme has simply contracted with certain doctors to ensure they will bill at a rate that the scheme will cover.
Your monthly contributions
The final step is to work out what you will pay for a certain amount of cover on a particular option. To do this, check the rates the scheme charges for you, as the member, and any dependants you have.
If you receive a subsidy from your employer, determine the monthly rate after the subsidy.
If the cost of the contributions is too high, consider a cheaper option but make note of the benefits you sacrifice in return. Accepting restricted access to doctors or hospitals in an option that uses a network may be one way to keep costs down.
To keep your contributions down you may need to choose an option that has co-payments on particular procedures or has less day-to-day cover. Always remember that you could then face paying some of your bills out of your own pocket.
If your budget is tight and you don't have spare cash for medical bills you may have to pay yourself, make provision for this by regularly setting aside a certain amount in a savings account earmarked for medical bills. Some schemes have products linked to the scheme that assist you to do this and that can be used for seamless payment of claims.
Other variables you need to consider
In addition to considering the type of option to join, there are other variables that determine the cover you enjoy and the contributions you pay. These are:
- Annual limits and sub-limits
The benefits the scheme provides you with may be unlimited, limited to a rand value (for example, R1 500), or limited to a certain number of consultations or services, such as 15 general practitioner consultations or one pair of spectacles every two years.
If the overall benefits are limited, check if the limit applies to you or to you and your family members combined, and if it would be sufficient if you were all involved in a motor vehicle accident.
Consider whether these benefits are sufficient for your needs and those of your family, particularly when a benefit limit applies to a combination of services, for example, basic and advanced dentistry.
Look at the limits in light of your healthcare needs and medical history and health risks.
Check what medical services are excluded, especially expensive treatments such as transplants and chemotherapy, and consider your options should you face illnesses that require these treatments.
- Private, network or state hospital cover
Check whether the hospital benefits are for care in private or public hospitals. Some schemes offer benefits at particular hospitals in return for discounted contributions.
- The rate at which your benefits will be covered
A factor that can make a big difference between the cover enjoyed under a particular benefit option and another is the rate at which healthcare providers are paid.
The Department of Health publishes a list of guideline tariffs known as the Reference Price List (RPL), and schemes use these rates to set their benefits.
However, many doctors and other healthcare providers are of the view that the RPL does not adequately cover their costs. As they are free to charge what they like, they charge more than the RPL rates.
Some scheme options pay 100 percent of the RPL rate - or a rate of their own based on the RPL. Others pay up to one-and-a-half times (150 percent), twice (200 percent) or three times (300 percent) this rate.
Joining an option that pays at a lower rate may limit your choice in doctors and other providers or mean that you will have to pay part of the bill out of your own pocket. Some schemes have set up networks of doctors who agree to charge the scheme's rates.
- Co-payments or levies
Schemes use co-payments or levies to manage costs. You may be required to pay, for example, R10 a script or 10 percent of the cost of each visit to a doctor or specialist or R5 000 for a procedure such as a hip replacement that does not fall within the prescribed minimum benefits (PMBs).
By making you pay part of the cost, schemes work on the premise that you will use only the services you really need.
- PMBs
Check how the scheme provides these benefits. For example, do you have to get these benefits from a particular provider or from state hospitals? Do you have to use certain medicines to enjoy cover?