Medical Expenses, Medical Aids And NHI
In South Africa, medical aids have become a big part of our lives. For those who can afford it, it is a non-negotiable monthly expense that secures an assurance for the health and wellbeing of our families and ourselves. According to excerpts from Finweek, the best advice from financial professionals is that 10% of your monthly earnings should be going towards medical coverage for the whole family. It is a massive expense, but an essential one, when the alternative is seeking medical care at South African government hospitals.
According to the same source, medical aid should only cover what is required. As a young person, couple or family starting out, a hospital plan is sufficient. Trying to cover all eventualities is not as essential to a young couple in their 20s or 30s as it will be to someone approaching their 50s. As you age, your medical needs will change.
The bottom line is that your health and wellbeing should never be a financial decision. It should be something that you know is taken care of, which is why medical aids exist, and why we contribute to them on a monthly basis. When planning your finances for the year, your medical aid should be a part of the financial budget so that it’s not a consideration that needs to be made in emergency situations.
What Is Gap Cover?
Medical aid comes with a lot of jargon that can often go straight over one’s head. A term that keeps on cropping up is gap cover. What is it and is it necessary? The choice is yours but understanding it will help you make an educated decision.
Service providers such as doctors, dentists and healthcare providers will charge a certain rate for their services. Sometimes this is within medical aid rates and sometimes it’s not. When there is a shortfall between what the service provider charges and what the medical aid pays (either to you or the provider), the member (you) is liable for the additional cost.
Medical aids might cover 100% of scheme rates, but this is not the same as 100% of costs charged by a service provider. It is 100% of what the medical aid covers for that service. This is the difference that most people misunderstand and the reason why gap cover exists.
Gap cover is a separate insurance item that can be taken out in addition to your medical aid. It is not related to your medical aid, but it will cover you for these unforeseen expenses and shortfalls. Again, this is something that needs to be considered as part of your medical financial budget.
How Will The NHI Change Medical Cover As We Know It?
The proposed National Health Insurance (NHI) for South Africa is supposed to stabilise all medical costs for the consumer, thus doing away with the medical aids that we know and use today. On the 8th of August 2019, the revised National Health Insurance Bill was published stating that medical aids may only cover “complementary cover to services not reimbursable by the fund.”
The state will cover costs for GPs, health practitioners, hospital expenses etc. Medical aids will only be allowed to cover complementary services, which at this stage includes cosmetic healthcare.
More detail will be provided over time, but according to Minister of Health, Zweli Mkhize, pooling state healthcare funds and the money spent on private healthcare (obtained through tax revenue streams and higher personal income tax) would result in more of the population having access to quality healthcare.
World Health Organisation former director-general, Gro Brundtland, is in approval of the proposed system. She says that while she understands that South Africa faces economic challenges, implementing a proper, workable healthcare system could at least address the health challenges of the country. Including ensuring clean drinking water is available to all.
According to the Department of Health: “Healthcare is a human right – this is a widely accepted international principle. This right should not depend on how rich we are or where we happen to live. The right to obtain healthcare is written into our Constitution.”
For more information on how to budget and plan for a medical situation or medical aid, consult your Employee Wellbeing Programme to speak to a consultant.
Resources: http://www.health.gov.za; https://businesstech.co.za; https://www.fin24.com
Photo by Martha Dominguez de Gouveia on Unsplash