Medical Aid vs Hospital Cash Plan

medical aid vs hospital plan

Two types of insurance products that are often misunderstood, are “Medical Aid” or “Hospital Plan” versus “Hospital Cash Plan”.

Difference between Medical Aid and Hospital Cash Plan

These two products are uniquely different from each other. Due to the high cost of hospitalisation, specialists’ fees and other associated medical expenses, it is important that members / policyholders understand the differences.

The table below explains the main differences between a “Medical Aid” and “Hospital Cash Plan”. It is aimed at providing information in general and may be used as a broad guideline for gaining a better understanding of these two products.

MEDICAL AID

HOSPITAL CASH PLAN

Type of cover

Provides mostly unlimited in-hospital cover (hospital & related accounts). May also include stated benefits for certain out-of-hospital medical expenses.
Provides cover at fixed / stated amounts of money for every day that you are hospitalised.

Extent of cover

Includes both hospital plans (predominantly in-hospital cover) and full cover medical aid plans (provide in-hospital cover and stated day-to-day benefits).

Hospital accounts are usually settled in full.  Related accounts (doctors and other providers) are settled at the particular scheme tariff.

In-hospital cover only.

Cash benefits can range from approximately R500 to R5,000 per day, depending on what plan you are on.

The daily benefit is constant and is not linked to the actual cost of treatment / medical bills.

Hospitals that may be used

Hospital benefits range according to the selected benefit option. In certain instances any private hospital may be used; in other instances only networks or public hospitals may be used.

The daily benefit remains the same, irrespective whether a private or public hospital is used.

Availability of cover

Pre-existing medical conditions may be excluded for 3 and / or 12 months.

Where no waiting periods are applicable, benefits are available immediately.

Most plans will cover hospitalisation resulting from accidental causes from the date of commencement of the policy.

Depending on which policy you have, cover for hospitalisation due to illness commences after either 6 or 12 months.

Benefit commences after a certain number of days spent in the hospital – usually after 2 days.

Cover for Prescribed Minimum Benefits (PMBs)

Yes
No

Payment of claims for in-hospital expenses

Usually directly to the hospital / other service providers.
Directly to the member, who must in turn settle his / her accounts.

Adequacy of cover

Varies from scheme to scheme according to your selected benefit option.

Hospital cover is usually unlimited.

Cover is usually for a fixed Rand value limit, which may not be sufficient if hospitalised if for an extended period.

Cost

Contributions starting from about R455 per month (low-income earners). Benefits are usually limited to network providers.

Contributions could go up to R13,122 per month.

Premiums starting from about R250 per month.

Tax deductibility

Tax benefits are available within certain parameters.

R364 per month is tax deductible for the first two dependants (each) & R246 per month for every additional dependant.

No tax benefit.

Eligibility

Open enrollment with no age limitation
Cover usually available for applicants between the ages of 16 – 75

Applicable exclusions

May be subject to 3 and / or 12 months waiting periods. No pre-existing medical condition may be permanently excluded.
Pre-existing medical conditions may be permanently excluded.

Commercial status

Medical schemes are non-profit organisations.
Short-term insurers are for-profit companies.

Governance

Managed by a Board of Trustees.
Managed by a Board of Directors.

Regulating Act

Medical Schemes Act
Short-term Insurance Act

Regulator

Council for Medical Schemes
Financial Services  Board
Please note that not all aspects have been covered above and the information provided is neither a complete report/analysis nor is it intended to flout or in any other way compromise the conditions set out in the Financial Advisory and Intermediary Services Act’s General Code of Conduct insofar as comparing different financial products with each other is concerned.

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