You know that sinking feeling when you go into hospital for a procedure believing you are covered? When it takes longer to recover from the shock of the bill than the actual surgery? Thousands of people who have health insurance are waking up to the fact that the term can be a classic contradiction.
Far too many consumers are confused between the terms hospital plan and health insurance. This is not made any easier by the fact that health insurance is available in two forms – GAP Cover and hospital insurance.
According to Dr Bobby Ramasia, Principal Officer of Bonitas Medical Fund, the National Treasury has been approached to make amendments to the Demarcation Act in terms of medical aid schemes and medical insurance. Currently, medical aid schemes and the hospital plans they offer are not considered as insurance because medical schemes are non-profit, strictly controlled and regulated by the Council for Medical Schemes and the Medical Schemes Act 131 of 1998. However, medical insurance policies are ‘for profit’ companies. The recommended changes to policy will also address when insurance is paid out – the industry is pushing for this to come into effect from day one as opposed to a waiting period of a few days.
Medical Aid Hospital Plans
A hospital plan provides you with basic, yet important medical cover. They differ from scheme to scheme but in essence this plan – regulated by the Council for Medical Schemes – includes cover for all your required in-hospital procedures and check-ups. So when you are admitted into hospital for a procedure or due to an accident or illness, your expenses are covered – within the limits set by your particular plan. You are required to cover almost all of the other day-to-day out of hospital costs (such as visits to the doctor, specialists and medicine).
The law also requires that medication for 27 chronic conditions – known as Prescribed Minimum Benefits or PMBs – must be covered by all medical plans, including hospital plans. These include:
- Addison’s disease
- Cardiac failure
- Chronic obstructive pulmonary disorder
- Chronic renal disease
- Coronary artery disease
- Crohn’s disease
- Diabetes insipidus
- Diabetes type 1
- Diabetes type 2
- Multiple sclerosis
- Parkinson’s disease
- Rheumatoid arthritis
- Systemic lupus erythematosus
- Ulcerative colitis
- Bipolar Mood Disorder
However, at times there may be a shortfall between what the Plan pays and the actual tariffs charged by the hospital and specialists. You will be expected to make up the financial difference and this is where GAP Cover or a Hospital Insurance policy can help cover the shortfall.
The good cop
GAP Cover as the name suggests, assists with additional insurance cover to help pay for the difference between specialist charges and the amount paid by the hospital plan. Again the amount of cover differs from policy to policy. Many consumers purchase GAP Cover in conjunction with a hospital plan to provide for additional cover, however it can only be used for specialist service costs and not general healthcare related costs. Bonitas says that the proposed amendments propose that GAP Cover includes any and all shortfall costs for health related services and products, ie, between the costs that medical schemes are obliged to cover and what is charged by the medical practitioner.
GAP cover complements medical schemes – it has never been a problem as it covers the costs between medical scheme tariffs and benefit limits. It is legitimate and a good cover for shortfalls.
The bad cop
Hospital insurance is not a medical aid but rather provides you with cash benefits that are paid to you while you are in hospital due to illness, accidents or intensive care of convalescence. You are able to use the money however you please, to cover your medical expenses or daily household costs.
In short, hospital insurance is:
Governed by the Financial Services Act (Short-term Insurance Act)
Does not cover Prescribed Minimum Benefits (PMBs)
Can include Personal Accident risk cover such as disability and loss of limbs, inability to work, salary protection, death and/or funeral covers.
Paid directly to the Insured
Used in conjunction with Medical Aid Not tax deductible
So why the bad cop? Firstly it is a set amount which might not cover your hospital or medical bills, leaving you financially short and, in many cases, it does not kick in until a waiting period of three to five days. You will be responsible for settling all your medical bills and although the thought of being paid R5 000 a day while you’re are in hospital sounds appealing, this usually falls way short of the actual costs charged by surgeons, anaesthetists and hospitals.
Turning the bad cop good
The new amendments propose introducing payment from day one rather than having a waiting period and, as with gap cover and hospital plans, hospital insurance will be far more regulated going forward to ensure the practical protection of a consumer’s medical needs.
The best news though is that the guidelines are opening the door for collaboration between medical schemes and insurance providers to offer a broader product range.
‘We have seen a growth in health insurance products over the past few years,’ says Dr Ramasia. ‘This is mainly due to medical aid being prohibitive for low income earners. For those strapped for cash there are healthcare options though. We suggest you shop around for the best plan that covers your – and your family’s – healthcare needs and your pocket.’