There are a few distinct differences between medical aids and medical insurance, which are two completely different medical assurance products. With the high costs of medical aid scheme membership or private cover in South Africa, it might be worthwhile to look at getting medical insurance, if you can’t quite afford a medical scheme. However, it’s important to know the difference and what you are signing up for.
1. Costs and benefits
Medical aid scheme membership can be quite expensive, which is why medical insurance providers have stepped in to bridge the gap between those who need medical cover and those who can afford it. Take note, however, that medical insurance might seem cheaper than a medical scheme, but that’s because it offers less cover and fewer benefits. It depends on each individual’s needs, whether they need medical aid or medical insurance – but the rule of thumb is that if the premium is cheaper, it’s generally less comprehensive.
2. Cover vs. insurance
Medical insurance is categorised as a long-term insurance policy with stated benefits. In the policy document, you’ll see that it’s stated that if X happens to you, then you get paid out Y. And if A happens to you, you get paid out B. In comparison, a medical aid has to cover its members based on specific conditions based on the prescribed minimum benefits (PMB’s), no matter what they are. Medical insurance has its limits.
3. Who pays whom?
Medical aid schemes pay out the medical service provider directly. The member does not have access to any financial benefits – their costs are covered directly. On the other hand, medical insurance pays out a set amount based on the stated benefits, and you will then need to go and settle with the medical services provider (doctor, hospital, etc.). The big question with medical insurance is whether the pay-out will be enough. If you end up in hospital for a month, yet your stated hospital benefit is only R75 000, the onus is on you to make up the difference. However, if your R75 000 hospital benefit pays out for a two-day stay in hospital, you could always go to a five-star hotel for some recuperation time!
4. Which contributions are tax deductible?
Medical scheme contributions are deductible up to a limit, while medical insurance policy contributions are not.