With medical costs rising year-on-year, South Africans require some form of healthcare cover. The choice is medical aid versus health insurance or, as it’s sometimes referred to, medical insurance. Which is the better option?
To help you make an informed choice, we’ve covered the following points:
- how medical aid differs from health insurance
- which regulatory bodies oversee medical aid vs. health insurance
- how price and benefits compare
- tax relief linked to medical aid
- top-rated medical aids in South Africa
- a leading health insurance company in South Africa.
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.
Separate regulation of medical aid and health insurance
In South Africa, all medical aid schemes are regulated by the Medical Schemes Act and governed by the Council for Medical Schemes.
Health insurance is regulated by the Long-term Insurance Act and governed by the Financial Services Board (FSB).
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).
Top 5 medical aids in South Africa
Here are the five best medical aid schemes in South Africa, in terms of beneficiary base and economic indicators:
- Discovery Health has 1.14 million members, 2.46 million beneficiaries and an AA+ Global Credit Rating (GCR).
- Bonitas Medical Fund boasts a 35.5% solvency ratio, a pensioner ratio of just 5.10%, and covers 273,285 members and 602,415 beneficiaries.
- Momentum Health has a total beneficiary base of more than 300,000 South Africans, a GCR of AA- and a 28.6% solvency ratio.
- Medshield has a 45.3% solvency ratio, 5.35% pensioner ratio and provides benefits to more than 187,000 South Africans.
- Fedhealth covers 72,945 members and 148,815 beneficiaries, and has GCR of AA-.
Recommended health insurance provider in South Africa
Affinity Health offers a bouquet of affordable health insurance plans.
The portfolio includes a day-to-day and private hospital plan, together with a high-end combo option featuring both in- and out-of-hospital benefits.
The Brimstone subsidiary is currently ranked #1 on Hellopeter.com and has a Trust Index rating of 9.5 out of 10.
At IFC, we offer informed, objective advice about South African medical aid schemes and health insurance and can assist you in joining the scheme that best suits your needs and budget. Contact us for more information or to discuss your needs.
