In view of the escalating cost of medical schemes, many consumers are cancelling their medical scheme and opting for medical insurance. It is extremely important that such members understand the difference between these products.

Active advertising campaigns by the medical insurance industry have also, at times, led to greater confusion.

Members with medical insurance often only discover when they are admitted to hospital that their medical costs are most probably not covered by the daily amount paid out by their insurance (hospital plan / cash-back plan), bearing in mind that the expenses are for the stay in hospital, theatre fees, consumables and specialist accounts.

Medical schemes

Medical schemes are regulated by the Medical Schemes Act of 1998.

Schemes are required by law to provide and pay for treatment of the list of 270 Prescribed Minimum Benefits (PMBs), irrespective of whether you are on a comprehensive, network or hospital plan. Medical schemes also have to provide members with cover and treatment for the 26 Chronic Disease List conditions.

In hospital benefits cover the member from admission to discharge, if authorisation was obtained from the scheme, and includes the accounts of the surgeon, hospital, anaesthetist, medication, theatre, and so forth.

Insurance products

Hospital cash-back plans are not medical schemes and therefore not regulated by the Council for Medical Schemes. The products are much more affordable, in terms of their contributions, which makes them attractive to lower salary earners, as well as anyone who cannot afford a medical scheme.

The important difference is that these plans will pay the member a rand amount for each day spent in hospital, sometimes from the 2nd, 3rd or even 5th day only, regardless of the actual cost incurred. Payment for any procedures on some of these plans is a stated benefit, again not necessarily covering the actual cost, and not all admissions or procedures are always covered.

Consumers are urged to contact a reputable, independent consultant to provide advice to ensure that they select the most appropriate option for their needs and that they have a clear understanding of the product. The People Company specialises in structuring benefit combinations to suit the needs of the employer group and members of a medical scheme.