What Is the Difference Between Medical Aid and Medical Insurance
The Difference Between Medical Aid and Medical Insurance in South Africa revealed.
We tested them side by side and verified medical aids and medical insurance.
This is a complete guide to the difference between medical aid and medical insurance.
In this in-depth guide you’ll learn:
- ✔️ What is a Medical Aid?
- ✔️ What is Medical Insurance?
- ✔️ What is the difference between health insurance and medical aid?
- ✔️ What is the best medical aid insurance in South Africa?
- ✔️ How does medical insurance work?
- ✔️ Why do you need medical aid or medical insurance in South Africa?
So if you’re ready to go “all in” with the difference between medical insurance and medical aid in South Africa, this guide is for you.
Let’s dive right in…
Medical Aid VS Medical Insurance Summary
What Is a Medical Aid?
👉 Members of medical aid in South Africa are offered financial protection against the cost of their future medical care in exchange for a regular contribution.
👉 These payments are made to the medical scheme, where they are accumulated and protected as a pool. These endeavours are run on a not-for-profit basis, rather than a commercial basis.
How Medical Aids Work
👉 The most important features of medical schemes are that applicants are guaranteed to be accepted when they join, even if underwriting is used as required by the MSA, and that medical schemes pay the member’s actual medical costs.
👉 If you are hospitalised, your medical scheme will pay your hospital bills directly to the hospital, specialist, anesthesiologist, and so on.
👉 Medical aids must charge the same premium to each member for the same plan. For example, a member who is 28 years old and healthy will pay the same amount as a member who is 55 years old and needs to take medicine every day.
👉 Most medical conditions and treatments are covered by medical schemes. They are also required to provide certain minimum benefits for a wide range of conditions, life-threatening emergencies, and a list of 26 chronic conditions.
👉 They accept people of any age, so there is no maximum age to join. However, if you join a medical scheme for the first time after you turn 35, you will have to pay a higher premium.
👉 The premiums for medical aid go up once a year, at the end of each year.
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What is Medical Insurance?
👉 In South Africa, the term “medical insurance” refers to health insurance policies that pay a daily cash-back or payment per covered event to the client at a predefined set amount for each day that the client spends in the hospital.
👉 There is a maximum amount that may be paid out for each event, as well as a maximum limit to the amount that can be paid out annually.
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How Medical Insurance Works
👉 Health insurance pays per insured event.
👉 After a hospital stay, these policies pay out a set amount. The specified benefit has nothing to do with the actual cost of medical care, since it is meant to cover costs like loss of income.
👉 This means that medical insurance companies don’t pay the hospital based on how much care you needed. Instead, they pay a set amount based on the plan you chose.
👉 Medical insurance is sold by companies that want to make money. They use underwriting and actuarial knowledge to predict how many claims they will get in the future. They don’t have to take everyone who applies, and they can exclude certain medical conditions. Also, they don’t have to pay the insured amount, no matter how much the actual cost was.
👉 Health insurance premiums are different for each client because of factors like their age, the number of people in their family, and any chronic or other medical conditions they already have.
👉 Health insurance covers customers for either a certain amount of money per day or a certain amount of money per hospital event and per year.
👉 As with all types of insurance, your medical insurance premiums can go up when you make a claim, which can happen at any time of the year.
👉 Having both is good in many ways. Medical aid makes sure that you are taken care of if you need to go to the hospital, have a long-term illness that requires minimum benefits, or need day-to-day care. But medical insurance makes sure you get money if you end up in the hospital and can’t work or make money. It also pays for other costs that may come up while you are in the hospital.
👉 It’s like any other kind of insurance: you hope you’ll never need it, but if you do, it can be very helpful.
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A Comparison of Medical Aid and Medical Insurance
Different Objectives
👉 A medical aid ‘s primary objective is to provide members with coverage for the costs associated with necessary medical treatment.
👉 Coverage is based on the benefit structure of the medical aid plan, the scheme rules, and the scheme tariff.
👉 Most of the time, medical aids negotiate prices ahead of time with certain health care providers. Because of this, you may be forced to use GPs, specialists, and hospitals that are part of the network for the scheme.
👉 The benefits you can get match the amount you pay each month. They decide which treatments, conditions, and medicines the scheme will pay for in full.
👉 Health insurance, on the other hand, is meant to ensure that you receive a lump sum when you need money for medical expenses. This amount doesn’t change, no matter what kind of care is needed or which medical professionals are used.
Different Payment Methods
👉 Schemes usually pay the people who give medical care directly.
👉 With health insurance the money is sent to the insured person’s bank account, and they can use it for anything they want.
Different Regulatory Bodies
👉 In South Africa, the Medical Schemes Act and the Council for Medical Schemes are in charge of all medical aid plans.
👉 The Long-Term Insurance Act and the Financial Services Board decide what rules to follow for health insurance (FSB).
Different Prices & Benefits
👉 By law, medical aid providers must offer Prescribed Minimum Benefits (PMBs) for a list of long-term conditions like asthma, heart problems, diabetes, high blood pressure, etc.
👉 Health insurance companies don’t have to follow the same laws and don’t have to think about these needs.
👉 If you’re a member of a medical aid plan and you end up in the hospital, the hospital will usually be paid directly for your care.
👉 With health insurance, you have to pay the hospital bill yourself with the lump sum you get, which may or may not cover all your medical costs.
👉 Even though a medical aid plan covers more things, it usually doesn’t cover accidents that make you disabled or the loss of limbs, while health insurance may cover it. The latter may also cover death and funeral costs, while medical aid plans don’t.
Tax benefits
👉 Contributions to medical aid are tax deductible, but premiums for health insurance are not.
👉 At the moment, you can deduct up to R638 per month for the first two people on your medical aid plan and R215 per person after that.
👉 The Medical Scheme Fees Tax Credit (MTC) is also a way to get some tax relief.
✅ Try our free Medical Aid Tax Credit Calculator
Frequently Asked Questions
How do medical aids compare to medical insurance?
While medical insurance is a private health insurance policy that covers coverage for specific occurrences and may have limitations and exclusions, medical aid is a regulated healthcare coverage system that offers full benefits and promotes risk pooling.
Can You Have a Medical Aid and Medical Insurance?
Yes, you can have a medical aid and medical insurance. You may even have more than one medical insurance.
What Does a Medical Aid Do?
Medical aids provide members with financial protection against the cost of future medical care, like hospital costs, medicine, hearing aids, wheelchairs and more.
How Does Medical Aid Work in South Africa?
In South Africa, the Medical Schemes Act regulates all medical aid schemes. By law, they must follow a list of rules and regulations, from standard-rate fees to the cover of various prescribed minimum benefits.
What Does Medical Insurance Cover?
Medical insurance covers events at a predefined amount for each day that the client spends in hospital.
Are Medical Insurance Worth The Money You Spend?
Yes, medical insurance is worth the money you spend because you can prevent having to spend your life savings on excess payments if you need medical care.
Why Do You Need Medical Insurance?
You need medical insurance to help pay bills should you develop certain illnesses, have to go to hospital for some time, or suffer from injury or disability.
