Every month a big chunk of your income goes into your medical scheme contribution. For many people it remains a grudge purchase – that is until there is a medical crisis in your life and the scheme foots the bill.
The complexities of the medical schemes industry make it a veritable mine field which the average client (member) finds extremely confusing. Whilst call centres of the schemes are generally good in providing you with information, some members seek the assistance of a broker to help them choose a medical scheme, or to understand some of the intricacies once they try and claim from their scheme, or encounter other problems.
The major “issues” for most medical scheme members remain the following:
- Selecting a suitable benefit option offered by one of the 23 open medical schemes
- The high annual contribution increases (higher than CPI inflation and salary increases)
- The reduction of benefits
- Possible co-payments
- Understanding the exact benefits (including prescribed minimum benefits, chronic medication and the medicines formulary, dental benefits, hospitalisation, and day-to-day benefits)
- Understanding the structure of the benefits (medical savings account, self-payment gap, above threshold benefits)
- Understanding the structure of membership (is it a main member + 1 or 2 or 3, or is it a Parent/Adult/Child structure)
- The smooth running (at best) of the claims procedure
More about medical aid brokers
In South Africa brokers are allowed to receive a commission of 3% of your total monthly contribution for their services up to a maximum of R75 plus VAT per month. This commission earning is based on two “conditions”, namely introducing you to that medical scheme and providing you with an ongoing service. Clients should therefore not feel that they are imposing when asking for advice or assistance on an ongoing basis.
Positioned differently, when last did you hear from your broker? Can you remember his / her name? Whatever your answer may be, that broker receives a monthly commission from your scheme.
A broker wishing to sell a particular medical scheme must have a contract with that medical scheme. There are currently 23 open medical schemes and very few brokers, if any, have contracts with every scheme. This means that no broker is likely to offer you a complete choice of medical schemes.
Brokers must at all times adhere to the principles of best practice, meaning offering their clients the best choice of medical scheme benefit option. Many brokers do just that – they suggest the very best options to their clients without consideration of their commission earnings. But then there are also many clients of brokers who belong to over-priced benefit options, unsuitable benefit options, or medical schemes whose legal solvency reserves are much lower than the required level, and that may pose a real threat of failing financially.
Often, the problem arises from brokers optimising their commission earnings in that they champion membership to more expensive benefit options simply because it suits their own financial interest. They may also not move you to a more suitable / affordable option simply because it will not make commercial sense for them, bearing in mind the additional work for him / her coupled with a lower commission.
According to Caroline da Silva, deputy registrar for FAIS at the FSB, brokers could be held liable for not acting with care if they “should have done more and known more”. While members have the option of joining any open medical scheme directly and without the assistance of a broker, a good medical aid broker can be instrumental in assisting you. The following tips may help you when choosing / dealing with a broker:
How many schemes? – You have the right to ask your broker how many different schemes s/he is contracted to. The bigger the number, the greater the chances of you getting independent recommendations that really will suit your needs. There are 23 open schemes in South Africa – it is unlikely that a broker will be contracted to all of them, but if there are only a handful on his/her list, get another broker.
Choose a specialist – Bearing in mind the complexities of the industry, it is best to choose a broker who exclusively sells medical aids; not with a wide range of other products as well, such as life insurance, income protection, short term insurance and so forth. You need a specialist who is up to date with developments in the field; not someone who may use the medical scheme to get you on board as a client and then try and sell you all sorts of other products.
Changing health needs – As benefit options and benefit ranges change, so do your health requirements. An entry-level plan might have been fine for you when you were 25 and healthy, but as you grow older, and/or you get a family your healthcare needs may change. A good broker will alert you to the options that are best suited to your needs.
Sudden specific health issue – If you suddenly develop a particular health problem (such as vision problems or dental problems or diabetes) a good broker will have the information available on which schemes and which options will give you the best benefits and maximum cover for your particular health problems. It might require a change of scheme – a process which an efficient broker can handle seamlessly.
Changing fortunes – Ask about more affordable options if your financial situation changes. It is a lot better for you to have a basic hospital plan than to cancel your medical scheme membership altogether.
What can I claim? – A good broker will know what a scheme is obliged to pay for according to the Medical Schemes Act. He/she will have a thorough understanding of the provisions and legal requirements and the benefits on all the different options. Sometimes members fail to claim for certain medical treatments, simply because they are unaware of the fact that they can.
Fighting on your behalf – A broker is obliged to negotiate with the scheme on your behalf if there is a dispute about a specific claim. Few individual members have an overall in-depth understanding of benefit details – that is what your brokers gets paid for.
An early-warning system – If the scheme of which you are a member runs into financial trouble, you want to know about it early enough so that you can switch schemes and not be left without cover. By law, a scheme has to have 25% of its contributions in reserve. When it drops much below this, alarm bells should be ringing. Letting you know this is the job of the broker.
A safeguard – Many products, such as hospital cash-back plans, are not covered by the provisions of the Medical Schemes Act. Many people only realise this when they try and claim for medical costs unsuccessfully. A knowledgeable broker should be able to counteract the beguiling advertising campaigns of many of these products.
Regular contact – A good broker will contact you every year to find out if your needs have changed and to inform you of changes in the field of medical schemes which are relevant to you. H/she should also keep you up to date of changes in benefit structures, changes in options within your scheme, or possible alternatives (possibly on other schemes) which might be better suited to your needs.
Article written by Susan Erasmus, for Genesis Medical Scheme