Personal finance guru, Paul Roelofse, looks at the positives and pitfalls of medical aids...
At this time of year most medical aid schemes offer choices of plans to their members for the new year.
There are many plans in the ranges of the various medical schemes and this makes choosing the appropriate plan that much more difficult.
I chose the word ‘appropriate‘ deliberately, as many members want to know what is the best plan for them.
Well, from my point of view, one can only know what is best when you are able to compare with hind sight. No one knows what medical expenses they will incur in the future so it is difficult to know which plan is best.
An appropriate plan is one which is likely to provide benefits relative to your health and your affordability.
You get what you pay for
Essentially, medical aid is insurance. Schemes work on the principle of contributions received covering claims paid out. The variety of plans offered differ in price because of one reason – benefits. So it stands to reason that you get what you pay for. The more the plan costs the more the benefits compared to cheaper plans.
Don’t choose your plan purely on cost
Study the benefits in line with your likely usage and then compare costs. Are you likely to be a high user or low user of medical your medical aid. The higher your likely usage the more comprehensive your plan should be. Conversely, the lower you anticipate claiming the more essential plan your plan could be. Be careful of very cheap plans that promise hospital cover. You get what you pay for, so you probably will find a limit in your hospital cover. The better plans have unlimited hospital cover which means you won’t have to leave after a few days. You can stay for as long as the procedure and recuperation requires.
Cover the big bills
Especially, if affordability is a problem you should choose a plan that covers you adequately when being admitted to hospital. The cost of surgery is horrendous in many cases so much so that hospitals won’t even admit you if your does not cover you sufficiently.
Covering the small bills
Many schemes offer medical savings accounts for the claims out of hospital. Doctors, dentists, medicine, glasses/contacts, etc. These bills are smaller than those in hospital and you won’t have to sell your house if you claim for these. Here is where you can make your plan fit your budget.
Low users can have a smaller savings account than higher users. Lower users can also consider excluding a comprehensive scheme which insures for claims once the savings account is exhausted. The saving is in the premium through the year which in turn can be used to offset bills if the savings account is depleted.
Manage your wellness
A fact of life is that the more healthier you are the less you will claim. Schemes offer wellness programs which are really worth it if you work with them. They aim at rewarding you for being healthy offering a definite value proposition which could compensate for the cost of your plan. The trick is to get involved and keep up with the program.
Understand your medical aid plan before you make your option. Many members choose a popular plan and only realise what they are actually covered for when they come to use it. If you choose an essential plan for the right reasons you won’t be disappointed when claiming because your expectation will be realistic.
If you are in any doubt consult your financial planner for advice.
Listen to personal finance expert, Paul Roelofse, below for more information...