There are new financial products constantly emerging in the market which will help you fund your healthcare expenses. Most are reworked products that you may have previously known by other names. Some are truly new and unique. But before you jump ship and abandon your medical aid for these cheaper financial products, it is important to understand the differences. The fact is that there is no product that can fully match a medical aid although many offer comprehensive benefits. Medical insurance is one such product.

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Differences Between Medical Aid and Medical Insurance

Often the advertising campaigns make some of these products seem so similar that it is difficult for the average consumer to see the differences. Medical aid is a type of insurance that is regulated by the Council of Medical Schemes and is specifically designed to meet with the costs of private healthcare in South Africa. Medical insurance is not regulated by the Council of Medical Schemes but is still a good financial product that can also assist you with funding your healthcare expenses.

Medical insurance is a revamped form of occupational health insurance, a type of ‘sick benefit’ that employers usually provided for low income workers in their employ. Although medical insurance has made great strides in improving the benefits and is now available to any person without the employer’s involvement, it is still not a medical aid. These days medical insurance provides benefits for general practitioner (GP) and medical specialist visits, dentistry, optometry, some acute medicines and certain diagnostic investigations.

Medical Insurance Hospital and Chronic Benefits

Newer medical insurance products have also provided a hospital benefit where a small lump sum is paid to the hospital when you need to be admitted. Often this lump sum is equivalent to the deposit that you would have paid to the private hospital if you did not have medical aid. It ensures that you are accepted at a private hospital, but a medical insurance does not currently pay for all the costs you incur thereafter while in hospital. Surgery and other in-hospital procedures are not funded by medical insurance if these costs exceed the lump sum paid at the time of admission.

Medical aid does pay for surgery and other essential hospital procedures. In addition medical aid provides a chronic benefit for the funding of chronic medicines and the monitoring of chronic diseases. The prescribed minimum benefits rule means that medical aids have to pay for the management of certain life threatening chronic condition for the entire year even if the chronic limit is exhausted. Medical insurance does not currently include a chronic benefit.

Advantages and Disadvantages

It is important to look at the pros and cons of both medical insurance and medical aid before you opt for one cover over the other. Both products have distinct advantages and disadvantages and there is no way of saying that one is better than the other. It depends on your individual needs and given that each product is different in many ways, it is unfair to label one as the better option.

  • Medical insurance pays for GP, specialist, dentist and optometry benefits. Medical aid with day to day cover also provides these benefits but also includes auxiliary health practitioners like physiotherapists, psychologists and so on.
  • Medical aid, even a hospital plan, provides a chronic benefit. Medical insurance does not pay for chronic medication.
  • Medical insurance pays for an acute prescription up to a certain flat rate depending on the plan. Medical aid pays for acute prescriptions according to the NAPPI code price although there may be a co-payment and only generics may be paid for in some cases.
  • Medical aid has an extensive hospital benefit that will pay for your hospital stay, surgery, diagnostic investigations and medication while you are in a private hospital. Medical insurance only pays a lump sum at the time of admission and the patient is responsible for any other costs above this amount.
  • Medical aid rates at the time of joining are not determined by your health status and previous medical history although waiting periods may be applicable. Medical insurance can charge you higher premiums based on your medical history and pre-existing conditions.
  • The cheapest medical insurance plans are about half the monthly price of the cheapest medical aid plans. In both of these cheapest options, you are restricted to which service providers you can use.

These are just some of the advantages and disadvantages of medical insurance in relation to medical aid. It is important to speak to an insurance broker or financial planner about these products before making a final decision of one over the other.

Medical Insurance vs Medical Aid in South Africa
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