By: Ambledown Financial Services

Don’t sacrifice medical cover to free up cash, say experts

Take every opportunity to review your costs and look at ways to save money. While it may be tempting to cut medical cover from monthly expenses, this could be a costly mistake in the long run, experts say.

Michael Emery, Marketing Executive at Ambledown Financial Services, says: “In these tough financial times, consumers are feeling the pinch. The first thing many people do is look at how they can save on insurance products, to cut back on cost. This may have a short-term relief on the pocket, but could have disastrous consequences when an unexpected turn in your health requires the very benefits you forfeited.”

Charleen Rix, Head of Healthcare at Sasfin Wealth, agrees. “Murphy's Law says anything that can go wrong will go wrong. An unexpected medical expense will lead to you having to pay for the full cost of the medical treatment – bearing in mind that hospitalisation or cancer treatment can run into the hundreds of thousands of rand,” she says.

Rix recommends making medical decisions based on the key factors concerning your healthcare needs. She says: “Be sure you understand your healthcare requirements – past, present and future. Ask yourself: What was my claim experience in the previous years? Did the family's day-to-day benefits run out? How much out-of-pocket costs did I have to cover? And what costs do I expect to incur in the future?”

One way to reduce your medical aid contributions while retaining cover is to select the network option, which limits you to a predefined network of hospitals. “In exchange for freedom of choice, you’d benefit from a reduced premium,” Rix says.

Another option is to notify the medical scheme if you’re registered on an option where contributions are linked to your monthly income, and your earnings have been reduced. “You’ll need to provide proof of your current income so that they can move you to a lower income band - which will result in your monthly contributions decreasing,” she says.

Downgrading your plan will lower your monthly contributions, but Rix notes that it's important to assess if the savings outweigh the correspondingly lower benefits, such as cancer coverage, chronic conditions, and other risk benefits.

“As a last resort, you could think about removing or downgrading dependants,” she says. “If you are unable to downgrade the entire family because certain members need more expensive services, such as oncology or chronic care, you might consider moving those dependants who are in better health to a less expensive option.”

Westley Van Rooijen, Head of Healthcare at Austen Morris Associates, says: “If you do decide to downgrade your medical aid, it is best to discuss your options and possible implications with your broker. The common misconception the consumer has, is that all medical aids are the same. This could not be further from the truth, and consumers may unknowingly forfeit much-needed benefits to save money. However, a broker may be able to assist you in identifying an appropriate Gap cover that will cover the shortfall in hospital costs that will occur when downgrading your medical aid.”

Van Rooijen adds: “When choosing Gap cover, it’s important not to select what seems to be the ‘best deal’, but rather to choose the option that covers the correct shortfalls evident in your medical aid option. It is easy for anyone to go online and pull a benefit guide for each Gap cover option, what is not easy and takes a lot of experience in the industry, is to ‘plug’ the right shortfalls. This is where brokers are important.”

Emery says: “Another advantage of going through a broker is that the broker is there to liaise and follow-up with the Gap cover provider if the member has a query or concern. The brokerage also

assists in ensuring that the member remains up-to-date with all necessary details and any technical information.”

Emery cautions against cancelling medical aid altogether, if possible. “There are consequences of cancelling medical aid and thinking that after a couple of months you will join again. There are possible waiting periods and late-joiner penalty fees which could be added. Again, the best advice would be to consult with your broker about this. One must also remember that Gap Cover is not the same as Medical Aid and not a substitute for a Medical Aid”

Primary health insurance for basic needs

If the soaring cost of living is making it impossible for you to join or remain on a medical scheme, there are primary health insurance options available. These products are more affordable, but they do not replace medical aid with hospital cover.

Emery says that the best way to plan for your healthcare within a budget is to try to stay healthy. “That is, of course, easier said than done. However, maintaining a healthy weight, and doing regular exercise reduces your chance of health issues. Staying healthy allows you to avoid expensive testing and treatments for chronic diseases like diabetes or heart disease,” he concludes.