Medical aid is the cover of choice for South Africans to afford private healthcare. It has extensive benefits which varies by different plans but offers certain core benefits to all members beyond any other financial product for healthcare expenses. However, medical aid can be expensive and is out of reach for the majority of South Africans, who either have to fund their own healthcare or depend on public health services. It should not be confused with other healthcare cover like medical insurance or health insurance which offer less benefits at a more affordable rate.
What is medical aid?
Medical aid is a form of financial cover that pays for essential healthcare services in the private sector. It is not a national health insurance which is planned for all South African citizens. It is also not a private medical insurance which is a cheaper cover offered by some short term insurers in South Africa. Medical aid is cover offered by medical schemes, which are non-profit entities administered by financial service providers (FSPs). Medical schemes must be registered with the Council of Medical Schemes and falls under the Medical Schemes Act of 1998.
Some of the largest medical schemes in South Africa include Discovery Health, GEMS (Government Employee Medical Scheme), Bonitas Medical Fund and Momentum Health. Schemes can either be open (unrestricted) where any person can join the medical aid cover or closed (restricted) where only employees of certain industry sectors can join. Discovery Health is the largest open medical scheme in South Africa whereas GEMS is the largest restricted medical scheme in the country. The latter only allows membership to government employees.
At one time there were over 100 medical schemes in South Africa. Currently (2020) there are approximately 80 medical schemes still in operation in South Africa. Of these schemes, the majority are closed (restricted) medical schemes. The financial strain on the medical aid industry has resulted in several schemes closing in recent years or schemes merging. Despite the large number of medical schemes in South Africa, the coverage only extends to some 9 million South Africans. This means that less that 20% of South Africans have medical aid cover while the remaining 80% largely depend on public health facilities.
How does medical aid work?
Medical aid is essentially a pool of all members’ contributions which is administered by the scheme. It pays out for member’s essential healthcare bills, either directly to the service provider or to the members. Service providers (doctors, private hospitals and so on) may be contracted into medical aid whereby they are paid directly by the medical scheme according to certain tariffs. Some service providers are contracted out of medical aid and patients have to pay the service provider directly and then claim for reimbursement from the medical scheme.
The payment of healthcare bills depends on the tariff for different procedures. This is set and adjusted annually by the medical scheme in consultation with various stakeholders like doctors and private hospitals. In the event of a procedure being conducted for a specific medical condition, the medical aid will only pay according to the pre-determined tariff, either directly to the service provider or to the patient/medical aid member. If the service provider charges a rate higher than the medical aid tariff then the patient/member is liable for the shortfall. Only essential procedures are covered by medical aid.
An additional cover that works in conjunction with medical aid is medical gap cover. This is a short term insurance policy, often separate from the medical scheme, which pays the shortfalls that may arise between what the service provider charges and what the medical aid pays according to its tariffs. Gap over extends to all adult and child dependants on the medical aid provided that the monthly contributions are paid in full and there are no waiting periods or exclusions in place. It is important to note that medical gap cover is only available to members of a registered medical schemes (medical aid members) and does not extend to members of medical or health insurance.