With medical costs rising year-on-year, South Africans require some form of healthcare cover. The choice is medical aid versus health insurance. Which is the better option?
Key differences between medical aid and health insurance
The focus of a medical aid scheme is to cover medical expenses on behalf of its members. Schemes usually pay healthcare providers directly.
Cover is dependent on the medical aid plan’s benefit structure, the scheme rules and the scheme tariff.
Available benefits are commensurate with the monthly contribution. They determine which treatments, conditions and medicines are paid for in full by the scheme.
Medical aids typically pre-negotiate rates with certain healthcare providers. As a result, you may be obliged to use GPs, specialists and hospitals contracted to the scheme’s network.
Health insurance, on the other hand, is designed to pay out a fixed lump sum per healthcare event. This amount doesn’t change, regardless of the type of treatment required or which healthcare providers are used.
The money is disbursed to the insured individual’s bank account and can be used for any purpose.
Comparing price and benefits
Prescribed Minimum Benefits
Medical aid providers are legally required to provide Prescribed Minimum Benefits (PMBs) on all their plans. PMBs cover a defined list of medical diagnoses and chronic conditions, such as asthma, cardiac arrest, diabetes and hypertension.
Health insurance providers aren’t subject to the same legislation and don’t have to consider these requirements.
Direct and Indirect Payments
If you’re hospitalised as a medical scheme member, the cost of treatment is paid directly to the hospital.
With health insurance, you have to settle the hospital bill yourself, using the lump-sum pay out, which may, or may not, cover all your medical costs.
Added Benefits
Although a medical aid plan provides more comprehensive cover, it doesn’t offer personal accident disability benefits.
Health insurance does. Depending on the type of policy you sign up for, it may also offer death and funeral benefits.
Tax benefits of medical aid
Medical aid contributions are deductible for tax purposes. Health insurance premiums are not.
Tax relief is available in the form of the medical scheme fees tax credit (MTC).
ryno@louwnet.co.za or 0645335339
“Money doesn’t pay for life insurance. Good health buys life insurance, the money just pays for it”
First Investment 