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The difference between a Medical Aid and a Health Insurance policy

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Unfortunately a good medical aid is out of reach for many South Africans. The insurance industry has seen the need to create an insurance based product to try and bridge the gap. Health Insurance is less expensive than a traditional medical aid because the cover is limited. If you can’t afford a medical aid then Health Insurance is a viable option.

Medical insurance plans fall under long term insurance in terms of financial services. It is not regulated by the Medical Schemes Act. It is a stated benefits contract, so in other words if a particular event happens you will get paid a fixed amount regardless of the actual cost. The legislation that governs medical schemes dictates that certain emergencies and conditions are covered in full by the medical schemes regardless of the plan type you are on. They are called Prescribed Minimum Benefits (PMB’s). This legislation does not apply to Health Insurance policies so they may not cover all of the costs. Still, if you can’t afford a medical aid, a health insurance policy will take the sting out of an expensive medical event.

A health Insurance policy is not a medical aid but rather a subscription to a network of medical services such as doctor and dentist Networks. There is no claiming process as with a medical aid. The member visits the medical services provider such as the network GP or Dentist, obtains medication or other relevant treatments without having to pay unless the treatments and or medications are excluded in the policy. Their hospital plans are insurance policies that pay the stated benefits directly to the member. The hospital will usually ask to be paid up front for treatment as there is a risk that you will not hand the money over and go on holiday to recover.  The policy includes disability and dread disease cover as well as death benefits which medical aid does not.

Here are the other differences in a Nutshell

Medical Aid

Medical Aid cover is based on tariff codes and procedures and they are regulated by the Council for Medical Schemes. Schemes negotiate tariffs with hospitals; one medical aid may pay R100 for a procedure and another R70. So It pays to shop around for the best deal if you know you will require treatment for a specific ailment down the road.

Health Insurance

The pay-out is based on is based on events and stated benefits. Health insurance is regulated by the Financial Services Board. Medical Aids often have shortfalls because the practitioners rarely keep to the suggested tariffs recommended by the South African Medical Association.

Health Insurance may be used as gap cover in conjunction with your medical aid to cover any shortfalls of your medical aid scheme.

Medical Aid schemes must by law cover PMB’s (Prescribed Minimum Benefits)

Health Insurance offers stated benefits and a formulary that may or may not cover PMB’s (Prescribed Minimum Benefits) so it is vital that you read the policy carefully.

Medical Aid schemes have got specified and yearly limits for procedures and health events do not need to be specifically stated

Health Insurance covers health events at fixed or stated amounts which pays directly to the member as opposed to the medical services provider

Medical Aid schemes are prohibited from including Personal Accident disability, death or funeral cove as part of their offering.

Health Insurance includes Personal Accident risk cover such as disability and loss of limbs and dread disease cover etc.

Health Insurance is allowed to include death and / or funeral cover.

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