2020 has been a brutal year, financially and emotionally. The pandemic and its subsequent aftershocks on household income and spending have been severe. Going into the new year, many families are reviewing household expenses and prioritising the ‘must haves’ from the ‘nice to haves’, but also reviewing their level of spend on the ‘must haves’ and whether there are better ways of doing things given their financial situation. Medical scheme membership is one such ‘must have’ that falls squarely into this category – everyone agrees they must have it, but at what price and benefit level?
“The realisation is that going into the new year, nothing has changed just yet in terms of the COVID-19 pandemic, and hence our personal financial planning should factor this in for the long term, and how we mitigate the ongoing impact of a severely constrained economy on our finances and income. Reprioritising household budgets is key in navigating through the months ahead, while ensuring that essentials such as access to quality private healthcare are taken care of,” explains Martin Rimmer, CEO of Sirago Underwriting Managers (FSP 4710) an authorised FSP, a gap insurance provider underwritten by GENRIC Insurance Company Limited (FSP 43638), an authorised Financial Services Provider and licensed non-life insurer.
The most crucial aspect right now is to secure your basic healthcare cover needs, such as medical scheme and gap cover options, which will be fundamental to carrying you through a potential health crisis. The usual health conditions and complications remain, in addition to the threat of the anticipated second wave of COVID-19. The parlous state of public healthcare is well-documented, and hence why access to private healthcare by means of medical scheme membership and gap cover is a non-negotiable for many.
“There are many ways of structuring your healthcare needs based on your unique circumstances, benefits usage and budget and why the advice and guidance of a professional healthcare broker will prove invaluable in unpacking all your options, and weighing up the pros and cons of each in line with your specific risk appetite,” explains Rimmer.
Top new year resolutions when planning your healthcare budget for 2021:
While there are many reasons why someone may want to change their medical scheme options, the most pressing one right now is likely to be affordability, cost and utilisation. For healthier members and families with lower utilisation of benefits, this is a massive consideration of whether the costs justify the usage.
“We were on a comprehensive medical scheme option that covers extensively for in hospital and day-to-day benefits and so on. The big issue for me was the cost versus our actual usage, and whether the eye-watering monthly premium of almost R14 000 really justified it. Our family is healthy and an analysis of our claims history over three years was one of the best exercises we did. It was also a very sobering revelation,” explains Christo Kok, a self- employed business owner.
“We averaged five GP visits for the entire family during the year, along with the usual dentistry check-ups for the children and optometry and annual health medicals for my wife and I as we’re both older than 40. When we combined all the costs, including the spend on any prescription and over the counter medicine and preventative screening and so on, our total spend was barely more than one month’s medical scheme premium. It was sobering. Of course, no one knows what the future holds, and being prepared for the costs of an accident or critical illness and required hospitalisation and specialist care in a private facility is a non-negotiable for us. We investigated further and found that we could get all of this cover on a lower benefit option that covers all the relevant PMBs, with a monthly premium that came in at less than a third of what we were currently paying.
“We were more than prepared to pick up the costs for any day-to-day GP visits, medicines, dentistry and optometry as out-of-pocket costs, and we would still be saving around R80k per year. After a meeting with our broker to go through our benefit options and what exactly we would be covered for – and not covered for – we moved to a lower ‘core’ benefit option within the same medical scheme that covers all hospitalisation and PMBs within an approved healthcare provider network.
“Gap cover was a non-negotiable for us and we added this at around R400 per month – this picks up any shortfalls on in-hospital procedures and specialist care since the benefit option we are currently on pays this out at 200% of tariff, and potentially providers can charge up to 400% of this rate. Both our medical scheme and gap premium now come in at just under R5k per month, which is a far cry from the R14k we were paying. As my wife and I are both self-employed, there was no relief from any company contributions to medical scheme membership, so this saving is huge for us. It is almost R110k per annum that we can put towards our savings and to funding any potential out of pocket healthcare expenses in future. With the combination of our medical scheme option and choice of gap cover option, we’re confident that we can face any health crisis in future, in a private, quality health facility, without having to fork out more than we are repaying on our bond repayments every month!” Christo says.
Get the balance right for your specific healthcare needs and budget
Martin Rimmer of Sirago adds: “While consumers increasingly move to more affordable ‘core hospital plans’, adding gap insurance to cover any potential in-hospital tariff shortfalls is essential to protect you from big financial expenses related to shortfalls on in-hospital treatment, from the anaesthetist to the specialist surgeon. A major health event is usually an unpredictable event and can strike a family at any time which is why the need for healthcare insurance cover, even in tough financial conditions cannot be emphasised enough. Never assume that the only time you need to see your broker is when you have money. It’s exactly when you are weighing up what is essential versus non-essential that your professional broker’s knowledge and impartial advice will shine a light on the way forward, and make sure your health needs are taken care of without crippling financial worries,” concludes Rimmer.
Information provided is general in nature and does not constitute financial advice.