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Why contribution increases must be priced correctly:

“This is why contribution increases must be priced absolutely correctly to allow for expected future
healthcare utilisation,” it says.
“Setting contributions lower than medical inflation will result in contributions falling behind claims and lead to ongoing medical scheme losses, ultimately resulting in future contribution ‘shocks’ to maintain sustainability.”

While medical scheme claims are currently depressed because of Covid-19, the trend is temporary and not reflective of underlying medical inflation.

Claims higher between waves

Discovery says the DHMS claims experience for 2021 shows that healthcare claims between Covid-19 waves are higher than pre-pandemic levels.

It says that as an example, between waves of Covid-19 infection, elective surgical admissions such as major joint replacements and cataract surgery have increased to 113% and 120% of pre-Covid-19 levels respectively.

Noach adds: “The claims experience of DHMS provides guidance on the expected future cost of healthcare claims between Covid-19 waves and once Covid-19 becomes endemic.

“The trends imply that medical inflation has persisted at a rate of 3% to 4% above consumer price inflation since 1 January 2020, and that DHMS will be well positioned with contributions at the level of anticipated claims before considering contribution increases for 2023.”

Contribution changes

Discovery has not confirmed the contributions from May onwards, but applying the 7.9% increase to current contributions provides the following estimates. Some of these may end up being R1 or R2 higher or lower.

Main member contribution 2020 2021 July 2021 Estimated contribution from May 2022
Executive Plan R7 257 R7 257 R7 688 R8 295
Classic Comprehensive R5 954 R5 954 R6 309 R6 807
Classic Delta Comprehensive R5 362 R5 362 R5 681 R6 130
Essential Comprehensive R5 003 R5 003 R5 301 R5 720
Essential Delta Comprehensive R4 507 R4 507 R4 775 R5 152
Classic Smart Comprehensive R4 327 R4 327 R4 585 R4 947
Classic Priority R3 814 R3 814 R4 041 R4 360
Essential Priority R3 278 R3 278 R3 472 R3 746
Classic Saver R3 290 R3 290 R3 485 R3 760
Classic Delta Saver R2 628 R2 628 R2 784 R3 004
Essential Saver R2 615 R2 615 R2 770 R2 989
Essential Delta Saver R2 085 R2 085 R2 209 R2 384
Coastal Saver R2 608 R2 608 R2 763 R2 981
Classic Smart R1 954 R1 954 R2 070 R2 234
Essential Smart R1 400 R1 400 R1 483 R1 600
Classic Core R2 449 R2 449 R2 594 R2 799
Classic Delta Core R1 960 R1 960 R2 076 R2 240
Essential Core R2 104 R2 104 R2 229 R2 405
Essential Delta Core R1 681 R1 681 R1 781 R1 922
Coastal Core R1 946 R1 946 R2 062 R2 225
KeyCare Plus R0-8 550 R1 207 R1 207 R1 279 R1 380
KeyCare Plus R8 551-13 800 R1 659 R1 659 R1 758 R1 897
KeyCare Plus R13 801+ R2 450 R2 450 R2 595 R2 800
KeyCare Core R0-8 550 R949 R949 R1 005 R1 084
KeyCare Core R8 551-13 800 R1 183 R1 183 R1 253 R1 352
KeyCare Core R13 801+ R1 809 R1 809 R1 916 R2 067
KeyCare Start R0-9 150 R914 R914 R968 R1 044
KeyCare Start R9 151-13 800 R1 538 R1 538 R1 629 R1 758
KeyCare Start R13 801+ R2 394 R2 394 R2 536 R2 736
Discovery says there has been a reduction in members withdrawing from the DHMS, and an increase in the number of new members joining the scheme.

As at the end of August, the scheme had grown its membership by more than 27 000 lives during 2021

It’s that time of year when medical scheme members are required to choose their plan options for next year. With 18 open medical schemes and hundreds of plan options to choose from, making a decision can be overwhelming, especially as members are generally not permitted to upgrade during the course of a benefit year. Key to making a decision is to first understand the underlying terminology and industry-specific jargon. Let’s have a closer look:

Acute condition: A condition that generally last a short period of time and which can be cured, such as a broken bone, ear infection or tonsillitis. An acute condition normally disappears after treatment.

Acute medication: Medication that is prescribed as a once-treatment to clear up an ailment such as antibiotics for a sinus infection or anti-fungal cream for a fungal infection. Acute medication is normally paid from out-of-hospital benefits in the case of a comprehensive medical aid, or from your medical savings account.

Adult dependant: Generally speaking, an adult dependant is someone over the age of 21 years of age. They will be charged the stipulated adult dependant rate.

Alternate healthcare: Also referred to as complementary medicines, this includes therapies such as chiropractic, homoeopathy, naturopathy, osteopathy, and reflexology. These therapies are regulated by the Allied Health Professions Council, and most medical aid now pay for these therapies, subject to limits and sub-limits.

Benefit year: Most schemes’ benefit years run from 1 January to end-December, with members being given the option to change plan options effective from January of the following year. If you join a medical scheme during the course of a benefit year, your benefits will be pro-rated. Most schemes do not allow members to upgrade their plan options during the course of a benefit year.

Child dependant: A child dependant is anyone under the age of 21 years, and who will be charged the scheme’s child dependant rate. The definition includes natural children, stepchildren, legally adopted children, or children placed in legal custody of the member.

Chronic condition: A chronic condition is a life-threatening condition that persists for three months or longer and which requires ongoing treatment such as diabetes, HIV, cancer, or asthma.

Chronic medication: Chronic medication is prescribed for life-threatening conditions such as heart disease or high blood pressure, and generally needs to be taken for longer periods of time.

Co-payment: A co-payment is a fixed rand amount that your medical aid requires you to pay from your own pocket for specific treatments or procedures. Typically, co-payments are charged for in-hospital procedures, scopes, scans and radiology.

Day-to-day benefits: These are benefits that are not covered by the hospital or the risk component of medical aid. Comprehensive medical aids offer day-to-day benefits for out-of-hospital costs such as dentistry, optical, GP consultations, and acute medication. If you have a hospital plan with a medical savings account, your day-to-day healthcare costs will be covered by your medical savings account. In the absence of a medical savings account, you will need to fund all your day-to-day healthcare costs.

Designated service provider (DSP): A DSP is a healthcare provider, such as a GP or hospital network, which has been contracted by a medical scheme to provide services to its members. Many schemes require their members to make use of their DSP in order to ensure that their treatment is covered in full. Where members choose to use a non-DSP, they may be required to pay a co-payment.

Disease management programme: Most medical aids have disease management programmes, especially for common diseases such as diabetes, kidney disease, HIV/AIDS, asthma, and cancer. The aim of these programmes is to develop treatment protocols designed to improve the health of members, slowing down the progression of the disease, and controlling or reducing the associated costs of treatment.

Exclusions: Every medical scheme has a published list of treatments and cares that it does not pay for. These generally include cosmetic treatment, treatment for self-inflicted injuries and/or su***de, treatment for obesity, etc.

Gap Cover: Gap cover is short-term insurance designed to cover the shortfall between the amount charged by doctors and specialists in hospital, and the amount paid out by your medical aid. Its role is to provide additional financial protection to medical scheme members who receive in-hospital treatment and care so that they are not saddled with large out-of-pocket expenses following a hospital event.

Hospital plan: A hospital plan provides cover for in-hospital treatment only and generally includes theatre costs, X-rays, medication, blood tests, and blood transfusions performed while you are in hospital. Hospital plans can range from a network option limited to 100% of medical aid tariff to fully comprehensive hospital cover that pays at 300% of the medical tariff, so it is always important to know what you are buying.

ICD-10 codes: A globally accepted disease classification and coding system developed by the World Health Organisation that identifies diagnoses, symptoms, and procedures. It stands for International Classification of Diseases, Tenth Revision.

Late joiner penalty: Because medical aids operate on the basis of cross-subsidisation, those who choose not to belong to a medical aid earlier in life can be charged a Late Joiner Penalty when they ultimately apply for membership. Where a member is age 35 years or older and has not been a member of a medical aid before 1 April 2001, or where there has been a break of longer than three consecutive months, the scheme can charge a late joiner penalty. Depending on your age and break in membership, your premiums can be loaded between 25% and 75%.

Managed care: Managed care is used by medical schemes to reduce costs, while still keeping the quality of care high, and these can be done through provider networks, provider oversight, drug formularies, chronic condition programmes, and pre-authorisation mechanisms.

Medical Savings Account: If your plan option includes a medical savings account, a portion of your monthly premium will be allocated towards this fund. The funds in your medical savings account can be used to cover day-to-day healthcare costs in accordance with the rules of the scheme. Once you have depleted the funds in your medical savings account, you will need to pay for day-to-day healthcare costs from your own pocket.

Medical scheme tariff: Medical expenses such as a doctor, specialist and hospital costs are not regulated, and service providers are entitled to charge fairly for their services. However, the Department of Health has issued a price guideline (known as the Reference Price List (RPL)) which is used by medical aids as a guideline when setting their rates. These medical scheme rates differ from scheme to scheme but, in general, the more basic plan options cover in-hospital costs at 100% of the medical scheme rate whereas the top-end plans pay up to 300% of the medical scheme tariff.

Member family: Refers to the principal member and all their registered dependants which can include a spouse, adult children who are financially dependent, and aged parents.

Network provider: A list of service providers, including hospitals, GPs and pharmacies, who have been contracted to a medical scheme to provide treatment or medication at an agreed rate.

Overall annual limit: An overall limit is a cap on the benefits offered by a medical scheme in a given benefit year.

Over-the-counter medicines: Medication that you can buy over the counter at a pharmacy without needing a prescription from your doctor or specialist.

Pre-authorisation: Most medical schemes require that you obtain pre-authorisation before being admitted to the hospital.

Pre-existing condition: Any health condition from which you suffer at the time of applying for membership of a medical scheme, keeping in mind that your condition must have been diagnosed by a registered healthcare provider.

Prescribed Minimum Benefit: Prescribed Minimum Benefits (PMBs) are a set of defined benefits to ensure that all medical scheme members have access to certain minimum health services, regardless of the benefit option they have selected. The aim is to provide people with continuous care to improve their health and well-being and to make healthcare more affordable. In terms of the Medical Schemes Act, medical schemes have to cover the costs related to the diagnosis, treatment and care of any emergency medical condition, a limited set of 271 medical conditions, and 26 chronic conditions which are defined in the Chronic Disease List.

Roll-over benefit: Any unused amount that you have in your medical savings account at the end of a benefit year will be rolled over to the next year and added to that year’s MSA balance. This is referred to as a roll-over benefit.

Threshold benefit: Generally provided by comprehensive medical aid plans, a threshold benefit is risk cover which kicks in after you have depleted your Medical Savings Account. In most cases, there is a self-payment gap during which members have to fund their own medical aid expenses before the threshold benefit kicks in.

Waiting periods: When applying for membership of a medical aid, there are two types of waiting periods that can be imposed. Firstly, there is a three-month general waiting period during which no claims will be paid. Thereafter, members can face a twelve-month waiting period on any pre-existing conditions that they have, although this waiting period can only be applied if you are joining a medical scheme for the first time, or if you have had a break in membership of longer than 90 days. During this period, a member will need to pay full medical aid premiums, while all medical expenses – excluding those relating to Prescribed Minimum Benefits – will be for their own account.

Keep focus on that which matters the most to you.

“Good advice is priceless”- Contact us for you financial planning assistance.