Choosing sufficient medical cover

Last month we looked at ways to assess the bewildering array of medical schemes. Once you've selected a medical scheme, you need to assess the options within that scheme to choose one that will provide sufficient cover for yourself and your family.

When we use the phrase 'sufficient cover', it might sound as if some options' cover is insufficient. We use the phrase quite loosely, simply to indicate that your financial situation might be such that you can afford to pay any shortfalls (i.e. where the medical scheme does not settle the full hospital bill, for example.) In this case, you would be prepared to pay a lower premium for lower cover. But perhaps you'd prefer to pay more in premiums and buy yourself a Rolls Royce option.

But first, let's look at the broad categories of options available: (In the list below, the term 'day-to-day cover' means out-of-hospital expenses.)

• Hospital cover only, with no day-to-day cover (unless the treatment falls under the Prescribed Minimum Benefits – more about these below)
• Hospital cover and day-to-day medical expenses, drawn from your medical savings account;
• Hospital cover and some day-to-day cover;
• An option with full benefits covering both hospital and day-to-day expenses; and
• Capitation/network model, in which you must use healthcare providers that belong to a network of doctors, pharmacists, hospitals, opticians, pathology laboratories and so on.

How you make your choice depends on three things: your state of health, your number of dependants and their state of health, and your finances. Here are some scenarios:

• If you are very healthy, your need for day-to-day expenses is minimal and you could get away with hospital cover only. This is especially true if you are single or married without children.
• If you have health issues, dependants, and you honestly can afford large premiums, a top-of-the-range option with full hospital and day-to-day cover is ideal.
• If you can't afford a full cover option, but you have dependants, you need at least some day-to-day cover. Some options will provide this on a limited basis – such as three doctor's visits per year per member.
• If you'd prefer only a hospital plan with no day-to-day cover, and you have children, you need some form of allocation for day-to-day expenses such as an option with a medical savings account. Or you can have your own medical savings account that you run independently of your scheme and your other bank accounts. (A doctor's visit for a sick child, antibiotics, and possibly a follow-up visit can total in the region of R700 – a heavy knock from your monthly household budget, but not so bad if you have money set aside for day-to-day expenses already.)
• If you have eye problems, you won't choose an option that only allocates R300 per year for glasses, unless you are prepared to pay for your optical expenses from your own pocket.

And so on – there are other examples, but the point is that you need to make your choice based on your health and also your personal finances. As we mentioned last month, the choice can be made easier if you don't mind using a registered broker. He or she can assess your needs and circumstances, narrow down suitable options to about four or five, and leave the final decision to you.

Another factor in your decision-making is your tolerance for administration. This might seem a small point, but some people genuinely prefer to manage their own day-to-day expenses simply because they find the administration easier than having to deal regularly with the claims department of their medical scheme.

Whatever option you choose, you will definitely be covered for what are known as Prescribed Minimum Benefits (PMBs). In terms of the Medical Schemes Act and its regulations, medical schemes are obliged to pay in full for the diagnosis, treatment and care of members in respect of some 300 benefits, which cover most life-threatening and emergency medical cases, as well as 25 common chronic conditions such as diabetes, epilepsy, Parkinson's Disease and asthma. This means that in fact there is no such thing as a pure hospital plan any more, as even a basic hospital plan must cover you if you have one of these chronic conditions.

Finally, a note about capitation plans, also called network plans. Such plans restrict your choice of healthcare providers, but can cost up to 20% less than other options. You will be given a list of doctors, dentists and optometrists to visit; your hospitalisation will be limited to certain hospitals, and your medication will most likely be generic. Some things, such as advanced dentistry, might not be covered. The fact that you are restricted to only visiting certain doctors or hospitals does not mean you will get inferior service. Network plans are a good choice if you are in excellent health, you don't mind your choice of practitioner being limited, and you have a limited budget for healthcare assurance.

Next month: More detail about the PMBs, and the Risk Equalisation Fund

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