1.1 Medical savings account

A medical savings account is a benefit offered to members of a medical scheme, specifically for expenses incurred on a day-to-day basis. If a member seeks medical attention, as long as they are not hospitalised, the bill will be paid from the medical savings account.

This is a new generation benefit that was introduced in order to instil accountability and responsibility in the use of benefits by members.

How does this work

This benefit is usually not available to all members of a scheme, only members belonging to new generation options will have access to this benefit. In the options where it is available, the Medical Schemes Act stipulates that a maximum of 25% of premiums may be allocated to the medical savings account. Therefore, depending on your option, you could have 10%, 15%, 20%, etc. allocated to the medical savings account.

As mentioned before, any cost that the member incurs when they are not hospitalised must be paid from the medical savings account. In essence, this money belongs to the member, they must manage the account and ensure that all their out of hospital expenses for the year are covered by the account. In case the member does not use all their allocated medical savings within a specific year, they will be carried over to the next year.

The account is pre-funded meaning that at the beginning of every year, the member is allocated their portion beforehand, and they can use it from the first day of the year. Should a member decide to leave the scheme during the year for whatever reason, three scenarios might take place:

1. The scheme will calculate the amount that has been utilised from the savings account. If it is less than what the member has contributed, it means that the member owes the scheme and will have to pay them.
2. If the calculations indicate that the member’s contribution is more than what they have utilised, the scheme will then decide on the following; if the member is moving to a new scheme that does not offer a medical savings account, or if they are not joining any scheme, the money will be paid to the member as cash, should they still have money in their account.

NB:- The payment will only be made after four months to cater to any claims that might come late after the cancellation of membership.

• The scheme could also transfer the balance in the medical savings account to the new medical scheme if the member is moving to another scheme that has a medical savings account.

Some members use up their savings accounts before the end of the year. In most schemes, the member will be allowed a certain number of GP visits where they will not pay for the consultation but might have a co-payment for the medication. However, if the member finds themselves using up their savings account every year, it might be necessary to reconsider moving to an option that has a higher allocation for a savings account.

Examples of procedures paid from the medical savings account

• Surgery and other procedures to correct refractive errors.
• In-Vitro Fertilisation and Infertility treatment.
• Treatment relating to sexual dysfunction.
• Treatment relating to or forming part of Organ Transplants including maintenance medication in the private sector.
• Treatment for cosmetic purposes.
• Treatment relating to or arising from participation in professional sporting activities.
• Examinations for insurance, school, association, emigration, visa, employment, or similar purposes.
• Obesity
• Educational Therapy
• Protective gear
• All costs relating to or forming part of the treatment of HIV/AIDS
• Costs associated with, or arising out of wilful self-injury, suicide or attempted suicide.
• Hearing devices including cochlear implant devices, whether introduced internally or not, as well as the maintenance of these devices.
• Household remedies, contraceptives, patent medicines, non-ethical and all proprietary preparations including but not limited to vitamins, minerals, face creams, body lotions, soaps, shampoos, laxatives.
• All costs arising from injury or illness for which any other party is liable unless the scheme is satisfied that there is no reasonable prospect of the member recovering adequate damages from the other party.
• All treatment and costs incurred for which benefits are not specifically provided.

Medical scheme members need to take note of the following:

• A member cannot use their savings account to pay for a co-payment.
• Out of hospital expenses are paid subject to available funds in the member’s savings account
• The scheme cannot pay for any PMB condition from the member’s savings account
• There are day-to-day expenses that are not paid from the savings account including;

1. MRI and CT scans
2. mammograms, cholesterol tests, and other screening tests
3. treatment for drug and alcohol dependency
4. psychiatric consultations and evaluations.

• If a family is covered, it is permissible and possible that one family member can use up the entire MSA on their own depending on their medical needs.
• In cases where a member is not utilising their MSA year in year out, it might be best to consider downgrading to a hospital plan to save on the premium contribution.
• It is not allowed for a member to pay for their monthly contribution from the savings account.

Class discussion

Discuss the article below as a class. How is this different from the normal medical savings account?

Health Funders Association - How Medical Savings Accounts are Changing – for the Better (hfassociation.co.za)

1.2 Hospital plan

This type of benefit can also be referred to as a risk pool. When the member contributes their premiums, part of the money is allocated towards their day to day expenses through the medical savings account, up to 25%. The rest will be allocated to the risk pool. This is a fund or benefit for all members of the medical scheme which covers all major healthcare expenses that are usually uncontrollable, like surgery. These events are typically low frequency but high costs which cannot be paid out of the pocket.

The downside of this type of benefit is that some procedures might not be covered at all e.g. cosmetic surgeries. Whereas some might carry huge co-payments. The following are examples of the procedures covered under this plan:

• Ward fees
• Operating theatres, unattached operating theatres & day hospitals
• Prescribed medicines & materials dispensed and used in hospital
• ICUs, Specialised ICUs & High Care Wards
• In Hospital Procedures & operations performed by GPs, Specialists, etc.
• Ante-natal consultations & foetal scans
• Confinements
• Radiology in hospital
• MRI scans, CT scans, Interventional Radiology, Angiograms, Duplex Doppler scans & Nuclear medical investigations
• Procedures & operations by Maxillo Facial and Oral Surgeons
• Ambulance Services
• Blood transfusion services
• Hospices & registered nurses
• Prosthesis & implants introduced internally as an integral part of an operation
• Renal Dialysis
• Oncology (Cancer) treatment
• Organ transplants
• Bio kineticists & physiotherapists

1.3 Comprehensive Plans

As the name suggests, these plans cover almost all healthcare expenses, but obviously at a higher cost as well. They combine day to day benefits, in-hospital cover, and chronic medication, subject to the rules of the scheme.

Some comprehensive options have got Threshold levels to build into the benefits, which means the following: Once a member’s savings are depleted and the member receives any day-to-day treatment (GP, specialist, dentistry, x-rays) which he pays from his own pocket, then those invoices must still be submitted to the scheme. The reason for that is, that once the member has spent a specific amount from his pocket for day-to-day expenses, as stated in the scheme rules (depending on the option he is on), he would have reached the Threshold level and the scheme will start to pay for day-to-day expenses for the member at normal medical scheme rates and with sub-limits.

With some options, the member will be allocated a certain number of visits to the GP for the remainder of the year.

1.4 Medical insurance

This is an insurance policy that is offered by insurance companies and not medical schemes. It offers cover for a specific risk (health event), just like any other insurance policy.

Medical schemes are non-profit organisations where members make contributions in return for cover for all their healthcare expenses.

Medical insurance works differently from medical schemes in the sense that medical schemes are non-profit organisations whereas medical insurance is offered by an insurance company and legally they are permitted to make a profit. Medical schemes are also more comprehensive, and they can cover all your medical expenses depending on the option selected, of which medical insurance could only cover for example hospitalisation. If a member is not hospitalised, they will not be covered, no payment will be made, no matter how sick they are.

The difference between medical schemes and medical insurance is illustrated in the table below:

1.5 Gap cover

Provides additional cover specifically for members of medical schemes. Sometimes healthcare practitioners charge more than the scheme’s limit for the procedure and the member will be liable for a co-payment; that difference is what will be covered by the gap cover benefit. This is a separate short-term insurance policy that the member will have to purchase over and above their medical scheme cover.

Most schemes today will fund a limited amount towards Chemotherapy, Radiation, and Cancer Biological drugs. Gap provides an additional amount to assist with shortfalls on these treatments.

Some medical schemes can reimburse even up to 300% of the scheme rate, but ironically the healthcare providers could charge up to 500%. Therefore, there is a need for members to have gap cover on the side to cater to such instances.

Only members of registered medical schemes in South Africa are eligible for gap cover, up to the age of 60 years. As with medical schemes, waiting periods and exclusions are also applicable.

Waiting periods

• 3 months general waiting period applies to all new members
• 12 months waiting period will apply to anyone with a pre-existing condition

Exclusions

These refer to the procedures that will not be paid for under the gap cover benefit like the ones listed below:

• Obesity treatment
• Cosmetic surgery
• Specialised dentistry
• Costs of co-payments defined as percentages rather than rand amounts
• Claims that are older than six months
• Any limit, co-payment, or penalty imposed on you by your medical aid scheme for non-compliance with scheme rules or authorisation procedures.
• Ward costs in a hospital or step-down facility;
• Upgrades to a private room;
• Pre-admission consultation costs;
• Medication (both in-hospital and take-home);
• External prostheses (an artificial breast or a prosthetic leg);
• External appliances, such as wheelchairs or crutches;
• Routine medical examinations, such as ultrasounds;
• Home or private nursing;
• Mental health disorders, transportation costs (such as in an ambulance);
• Costs incurred for treatment by a non-designated service provider (determined by your medical scheme)

The table below illustrates the need for gap cover

https://www.medicalaid-quotes.co.za/articles/gap-cover