7 questions with a financial adviser about medical aids

Name: Frohan Landman
Occupation: Financial Adviser 

Question 1: What common mistakes do people make when choosing their medical aid scheme?

People often tend to buy cheap. Rather speak to an independent financial adviser, who does not favour a specific scheme, to get honest advice.

The fine print can cost you a lot of money on the day you need your medical aid most, so make sure what the exclusions are, as well as whether there are any co-payments or provider networks that you must make use of.

Read the manual to make sure you know what you are paying for. Most frustrations are because clients are not aware of what they are buying. Brochures are there to inform and empower you to make the right decisions.

Question 2: What is the difference between a medical scheme and health insurance?

Medical schemes are registered by the Council for Medical Schemes (CMS) and provide medical cover in a regulated environment. If you belong to a medical scheme you are protected by the medical schemes act, which means that you have access to Prescribed Minimum Benefits (PMBs). These are a range of 270 medical conditions your scheme has to pay because you belong to a medical scheme.

Health insurance is short term insurance on your health. These options are usually cheaper, and you are not protected by the Medical Schemes Act of South Africa. Usually there is a lot more fine print than what you should be comfortable with.

Question 3: What does it mean when a medical aid scheme offers 100% hospital cover versus 200%?

Most medical aid options offer 100% cover, though some offer cover for up to 200%, or even 300%.

The 100% rate is the agreed-upon tariff between the medical scheme and the CMS, which is like a guideline that doctors use to determine their prices. If the doctor feels his or her specialty is worth more, or he or she might be more experienced, they may charge above scheme tariffs.

So basically, the 100% is a base tariff, and if you are covered at 200%, you are covered at twice the base tariff, and so forth.

Question 4: What is gap cover and is it a necessity?

YES! Gap cover is a standalone product that enhances your medical aid. There are many different gap cover companies and options available in the market.

They usually cover things like the in hospital shortfalls. This is when your doctor charges above scheme rates (in other words more than 100%), as well as your co-payments, etc.

Questions 5: Are there any medical insurance plans available for low income households?

Yes, you do get affordable medical insurance, but if you are able to get a medical aid, I would always suggest taking a medical aid above medical insurance.
You also get medical aids that provide capitation options, this is usually for low income earners and is not very expensive. Just remember that you get what you pay for; the cheaper your medical aid, the more exclusions, co-payments and prescribed networks it will have.

Question 6: What are the criteria for adding someone as a beneficiary on your medical scheme option?

Medical aids are rather lenient when it comes to the definition of dependants. They generally accept a beneficiary if it is your boyfriend or girlfriend and you are in a cohabitant relationship.
They will accept your fiancé and your fiancée, and, of course, your spouse and any children. They will even allow your parents if your parents earn less than a state pension and are no longer working.

They won’t accept your sister, brother, grandparents, friends or any other relatives and relations you might have, unless you are legally liable to maintain them by a court order, or you have adopted an underage child.

Question 7: Any final words of advice?

The Medical Schemes Act of 2001 makes provisions for waiting periods and penalties. Be sure to talk to your financial adviser before you turn 35 to avoid any unnecessary underwriting.