Medical aid brokers continue to be something of a “hot topic”, particularly as some have recently expressed opinions in the media and on social platforms that customers should avoid smaller medical aid schemes.
Their “message” is that only the largest medical aid schemes can safely pay your claims – a very odd sentiment given that as FAIS and CMS accredited brokers they should certainly know better.
What is however glaringly obvious is that while these opinions are expressed on various public platforms, an aspect that certain brokers conveniently choose to omit is how they can “legally” optimise their commission earnings – and that they champion membership to larger (and often more expensive) medical schemes because it suits their own interests.
Not to put too fine a point on it, a broker may say a more expensive scheme will be the better option for you as it will cover all your health funding needs, when actually their recommendation simply stems from the fact that they will be able to earn a higher commission.
In truth, however, it just does not make sense to pay more than you have to for a hospital bed. Beds are not reserved especially for members of a particular medical scheme. They are reserved for whoever can pay for them.
There most certainly is no special preference given in terms of which medical aid you belong to, and it should also be remembered that you also have the option of going to any medical scheme directly without making use of a broker.
So, when choosing a medical scheme, first decide on the type of cover that suits your family, even if you self-insure some of the risk, and then get quotes from all of the medical schemes that offer the type of cover that you are looking for. Choose the medical scheme that best suits your needs and your pocket.
Far too often the public is misled by “bigger is better”.
Dwell on this postulation for a moment: your broker realises that there are medical scheme options, very well suited to your needs, which charge a much lower contribution. If he decides to recommend that you move, and you agree, look at what might happen in his/her household:
“Honey, today I did a really good thing. I moved my 1 000 clients to a much less expensive medical aid. They are all, to a person, going to save a fortune every month and, all get the same or better benefits. But, dearest and here is the ‘but’, your car has to go along with our two holiday homes and private schooling for the kids. Oh, and our three overseas holidays per year will get cut to one.”
“On the other hand, if I say nothing to my clients and I continue to slate the smaller medical schemes – our comfort zone can continue. But please don’t tell my clients.”
A broker’s commission is based on the contribution that you pay to your medical aid; ergo: the higher your contribution – the higher his/her commission.
The Medical Schemes Act determines that the maximum amount payable to a broker by a medical scheme shall not exceed R71.07 plus VAT per month, or 3% plus VAT of the monthly contributions paid by the member, whichever is the lesser.
While that might not sound a great amount, consider what happens in the event of a broker having a medical book of 5 000 members, such as in the instance of 5 000 company employees. For argument’s sake, let us presume they all are on a hospital plan and that the main member has an adult dependant (spouse) and two children.
The table below speaks for itself.
|More affordable medical aid (hospital plan)||Slightly more expensive medical aid (hospital plan)|
|Monthly contributions for family of 4||R2 145||R2 770|
|Monthly broker commission||R64.35 plus VAT = R73.36||R71.07 plus VAT = R81.02|
|Difference in commission earnings per individual member per month||R7.66|
|Difference in commission earnings for 5 000 members per month||R38 300|
|Difference in commission earning for 5 000 members per annum||R459 600|
It is thus not hard to see that encouraging members to join a more expensive medical aid may well and truly be in a broker’s best interests, while not necessarily those of the client. The opposite is of course also true, i.e. your broker may recommend a more expensive medical aid, because the benefits offered are better suited for your individual healthcare needs and this of course would be in your best interest. Bigger is not always better, and cheap can be nasty; so do your homework and make sure you take the medical aid benefit option that will provide the best cover considering your healthcare needs along with what you can afford.