Medical aid is becoming outrageously unaffordable –

Medical inflation consistently outstrips consumer price index (CPI) inflation by about 4% per annum in South Africa. The Council for Medical Schemes announced in their 2014-2015 report that there had been an 11.6% increase in expenditure on hospitals from the previous year by medical schemes. CPI inflation for the corresponding period was 5% to 6%.

This is, however, not a phenomenon limited to South Africa, as medical inflation outstrips CPI inflation in many countries
Source: Fin24: August 2016

According to the South African Council for Medical Schemes, 40% of the total fees paid are attributable to hospital fees, with specialists and medication responsible for the remainder. Today, many individuals are looking at what their medical aid plan covers and looking at ways in which to bridge the gaps which may exist in their required level of cover.

Most of us are mistakenly under the impression that our medical aid will cover us for all and any medical expenses that might arise. People are often surprised when the bill arrives for unforeseen medical expenses that they assumed would be covered by their medical aid.

Let’s imagine you have to undergo unexpected surgery (due to ill health or an accident), which requires hospitalization; one or more specialist practitioners; an anaesthetist; in-hospital medication and possibly, a longer than normal hospital stay for recovery time.

Consider the shock or distress of receiving a bill, even though you have medical aid and you are still recovering from major surgery in hospital.

In some cases, members may have a shortfall or gap between what the medical scheme pays in hospital and the actual cost, as service providers are entitled to charge more than the medical aid tariff rate.

Why is this?
Based on your medical aid plan, your medical aid only covers a certain percentage of the medical aid tariff rate, but usually specialists and hospitals charge more than this rate – as much as 4 times more! This shortfall then becomes the member’s responsibility and they will therefore need to pay for the treatment separately.

This isn’t the case if you have medical gap cover. Gap cover is as the name suggests – covers the gap between what the medical aid covers and what your final bill comes to, for certain medical expenses.

Given the increasing costs of health care in South Africa, have you considered how offering a medical aid gap cover to employees may address a growing need your employees may have?

While gap cover won’t cover expenses like day-to-day medical needs, there are providers that will cover certain out-patient treatments and scans that you will need to ordinarily pay for yourself, if you don’t have gap cover.

What’s more, a co-payment gap cover will allow policyholders to claim back the co-payment that the medical aid requires in terms of procedures like CT scans, endoscopes and MRI’s. If your medial aid plan doesn’t have a savings plan, this is particularly valuable. Medical gap cover also extends to out-patient treatments like radiotherapy, dialysis and chemotherapy.

All gap cover policies require you to be a member of a South African medical aid scheme. Some gap cover policies will impose various waiting periods for pregnancy or pre-existing conditions. Some have maximum entry ages and others don’t. There is a wide variety of gap cover providers in the market, all with certain advantages and disadvantages which should be assessed according to an individual or group of individuals’ specific needs.

Younger employees, especially those with young children, who can’t afford the more expensive medical aid plans will undoubtedly find comfort in knowing that for inpatient treatment and some outpatient treatment, they will likely never be out-of-pocket even if they are on a lower medical aid plan.

Axiomatic Consultants are particularly well versed and appropriately positioned to effectively address the benefit needs of dynamic organisations. Numerous organisations engage us to develop or improve their benefit offering to employees thereby improving engagement and positioning themselves as Employers of Choice.

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