Medical Schemes vs Medical Insurance

Medical Aid Scheme Cover

• Is a form of insurance. In exchange for a monthly contribution or a premium, you get financial cover for medical treatment you may need, as well as any related medical expenses.
• There are two kinds of medical schemes, namely, open and closed (restricted) schemes. Any person can join an open scheme, but closed schemes are for the employees of specific employer groups or membership of a particular profession, industry, association or union.
• Medical schemes, therefore, help you to pay for your healthcare needs, such as medical expenses related to doctor’s visits, nursing, surgery, dental work, optometry, medicine and hospital accommodation when needed.

Health Insurance

• Is a type of insurance coverage that pays for medical, surgical, and sometimes dental expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly.
• The benefit could either be a fixed sum of money per day, or a maximum lump sum of money which is paid if a specified health event takes place (e.g. a specific health condition develops).
• Health insurance policies usually only pay out if certain specific health-related events happen and do not pay your medical expenses as a medical aid scheme would.

Three areas where Medical Aid Schemes and Health Insurance differ:

Price

For the Medical Schemes, all members pay the same amount depending on the selected plan and number of members (family size).

Health Insurance premiums are risk-rated, and an insurer may require that any policyholder entering into a contract after a specific age pay a higher premium than any policyholder entering into the contract at a younger age, provided that all policyholders with the same age pay the same premium.

Hospital & Chronic Benefits

Medical Schemes provide comprehensive coverage for dreaded diseases; and are accepted by most private hospitals (elective and emergency) depending on the scheme benefits package, selected plan and pre-authorisation required.

Health insurance provides a limited lump sum or daily rand amount for hospitalisation costs, but it is usually a rand amount of events per year that covers dreaded diseases.

Types of covers

Health insurance covers your day-to-day medical expenses or covers the cost of a specific medical procedure but does not have to provide cover for PMBs but pay out a specified benefit when you suffer from a health event covered by the policy.

Medical aid scheme covers in-hospital benefits according to the National Recommended Price List limiting benefits as per the plan and fully covers PMBs.

Source: The Council of Medical Schemes