Medical aid is a specialised field of insurance with words which may be confusing for new and existing members. Here are some commonly misunderstood terms and definitions which will help you better understand your medical aid.
An acute condition is one that can be cured, varies in terms of severity, lasts a short time and generally disappears after treatment, for example, bronchitis, tonsillitis, ear nose and throat infections, or pneumonia.
Acute medicine benefit
Acute medication is prescribed using once-off prescriptions, for example, an antibiotic for bronchitis. When the ailment clears up, you no longer need to take the medication, unlike medication for disorders such as, high blood pressure, which is usually taken for life. Acute medicine is usually paid from your general out-of-hospital benefits if your medical aid plan offers such benefits.
Anyone over the age of 21 is classified as an adult dependant and will be charged the adult-dependant rate.
All medical aid schemes announce changes to their products in the last quarter of the year for 1 January of the following year. The changes usually include benefit adjustments and rate increases.
A medical aid year starts in January and ends in December and the benefits are established on this basis. If you join during the year then your benefits will be pro-rated to your start date and the remaining months of the year.
The healthcare model whereby a fixed amount of money is paid by a managed care organisation to a network of healthcare providers. The opposite of a capitation model is a fee-for-service model.
Anyone under the age of 21 is classified as a child dependant and will be charged the child dependant rate.
Chronic Condition or Illness
A chronic illness is a life-threatening condition that persists for longer than three months and requires ongoing treatment, for example, diabetes, asthma, and cancer.
Chronic medication is taken for certain life-threatening conditions such as diabetes and heart disease that require ongoing treatment. Medical schemes are entitled to manage benefits for these conditions by specifying your choice of medication and by limiting cover on certain brands, or only covering generic medication.
Chronic illness benefit
Schemes need to pay ongoing medication costs for the 27 chronic conditions specified in the Medical Schemes Act, although members may be required to use generics. Once you have registered your condition as a chronic one with your scheme, this medication will not be paid for from your Medical Savings Account (MSA) but from your scheme’s chronic benefit.
Claims Paying Ability
This is the number of monthly claims that the scheme is able to cover with its existing cash and cash equivalents.
In terms of legislation, all members of a medical scheme option must pay the same contributions and cannot be asked to pay more due to age or ill health.
Comprehensive medical aid
Comprehensive medical aid is a product providing members with in-hospital and extensive out-of-hospital benefits. Out-of-hospital benefits include doctor visits, prescribed medication, optometry, dentistry, radiology, pathology etc.
Principal members of restricted medical schemes are entitled to remain on the scheme after retirement even if the employer no longer pays the contribution. In the event of the death of the principal member, the dependants will still be covered by the scheme.
Co-payments / Deductible
A co-payment or deductible is a portion of the cost of a procedure for which the member is responsible.
These are out-of-hospital benefits differing in levels of cover between schemes and vary according to the type of medical aid product. Schemes with savings accounts fund these costs from available savings, whilst traditional plans have defined annual limits.
Designated Service Provider (network providers)
A payment arrangement that a medical scheme will have with a group of medical service providers (e.g. hospitals, doctors, pharmacies etc.) – whereby the scheme will require its members to use these service providers in order for the claim to be paid in full. Should the member choose to use an out-of-network service they will be required to co-pay for the service.
There are lists of exclusions that most schemes apply, for example, cosmetic surgery, obesity, and self-inflicted injuries. Some products include additional exclusions and the most common are joint replacement surgery, dental surgery, and back and neck surgery unless motivated as an emergency trauma-related procedure.
If your benefits run out, for example, you exceed in-hospital treatment limits because you have a cap on your plan, you may ask your scheme to make further payments for your in-hospital treatments. Although schemes will evaluate these requests according to specified guidelines, it is not obliged to grant all requests for ex-gratia payments.
Gap cover is a separate insurance product that can be taken out to supplement shortfalls in cover incurred during a hospitalisation or major medical expense event.
General cover plan
A basic medical aid plan, which provides in-hospital cover at 100% according to medical aid rates and limited out-of-hospital cover.
Hospital plans are usually cheaper than a comprehensive plan and provide cover for hospitalisation costs and not for out-of-hospital treatment. All hospital plans also need to cover expenses for the 27 chronic conditions listed in the Medical Schemes Act as Prescribed Minimum Benefits (PMBs).
Late Joiner Penalty
The Medical Schemes Act allows medical schemes to apply a late joiner penalty to members taking out medical aid for the first time or after a break-in cover when over the age of 35. The late joiner penalty is calculated according to the number of years that you have not belonged to a registered South African medical scheme over the age of 21 and applied as a percentage of monthly contributions.
Medical savings account
A percentage of your contribution, usually between 15% to 25%, is paid into a savings account from which your day-to-day claims are paid. If you do not use this money in a given year, it is carried over to the following year. If you leave the fund and have unused money in your medical savings account, it will be paid out to you after a 3-month period. The full 12 months medical savings amount is credited to you upfront, so if you leave halfway through the year and have used the full 12 months’ savings, you will have to refund the medical scheme for the overspent portion.
Medical scheme tariff
This specified tariff is the rate or percentage of the account that the medical scheme will pay for procedures or consultations. For example, your dentist may charge 200% medical aid rates at R1000 for a consultation, but if the medical fund tariff on your option is only 100% for that particular type of consultation, you will have to pay the short-payment of R500 as the difference.
It’s a member’s responsibility to disclose all health information when applying for cover. Failure to disclose information could result in the medical scheme terminating the membership.
Open and Closed Funds
An open fund is accessible to everyone who wants to join the scheme, while a closed fund is usually just for certain groups of people, such as the employees of a specific company or industry for whom membership of the fund is often a condition of employment. Members of the public cannot join these medical schemes.
Overall Annual Limit
Overall limits are the cap on the benefits a medical scheme will pay during a medical aid benefit year for in-hospital benefits.
These are medicines that you do not need a doctor’s script for but can obtain over the counter from the pharmacist.
Hospital admissions for non-essential or non-life-threatening procedures need to be authorised by the medical scheme prior to you being admitted.
A medical illness or injury that you have before you start a new health-care plan.
Prescribed Minimum Benefits (PMB)
A defined list of conditions, which include 270 hospital treatments and 27 chronic conditions, for which all medical schemes in South Africa have to provider cover in terms of the Medical Schemes Act.
The amount you pay for your health cover very month. Medical Schemes have fixed-rate tables for a principal member, adult dependant, and a child dependant.
This is the main member on the fund which can be a single person or someone who has registered one or more dependants on the scheme. If the main member dies, the dependants can usually stay on the fund, but one of them will have to become the new principal member.
Depending on a new member's risk profile and history of cover, they may be subject to underwriting limitations. Restrictions can take the form of late-joiner penalties or waiting periods.
Your unused medical savings are carried over from one year to the next.
The self-payment gap is the amount where you must fund day-to-day medical costs after your medical aid savings have been depleted.
This is the difference between the amount charged by the medical practitioner, and the amount that the medical aid will pay out.
Medical practitioners who offer specialised products or services not offered by general practitioners (GPs) are called medical specialists. A specialist is more qualified to give an accurate diagnosis of a complex condition.
A sub-limit is the amount medical aid schemes are prepared to pay on certain in-hospital medical procedures or prosthetic devices. Once the limit has been reached, the member will be responsible for any shortfall.
If a member defaults on the monthly premium, their benefits will automatically be suspended. The medical aid will attempt to collect a double premium in the following month to ensure benefit continuation.
Threshold benefits provide you with a financial cushion for extensive out-of-hospital expenses which kicks in when your savings account is depleted; and the self-payment gap, specified in the scheme rules, has been funded from your own pocket.
When you join a medical scheme two types of waiting periods can be imposed:
12 month waiting period on pre-existing conditions. This waiting period can only be applied if you are joining for the first time or have had a break in coverage of more than 90 days.
When evaluating your medical aid, you may feel overwhelmed by the many medical aid terms. If you’re confused about the various medical aid plans available, you can visit Hippo to compare options and make the best decision based on your individual needs and affordability.