Medical Insurance or Medical Aid?

With the recent COVID pandemic and even before, health care has become an expensive service increasingly becoming unaffordable for some. With constant changes to our environment, the challenge to most families is to risk selling assets or obtaining finance to pay hospital bills or to provide at least some cover for these unfortunate events. Clients have the option to choose between a Medical Aid and a Medical Insurance Plan. So, what are the differences between a Medical Aid and Medical Insurance? – the question mostly asked.

Herewith, a few points to consider which will hopefully provide some insight into the differences.

Medical Aids are regulated/governed by the Council for Medical Schemes and are their benefits and premiums approved by the Council annually after a submission by the relevant Medical Aid. It is common practice by Medical Aids to only allow members to use healthcare specialists who belong to it’s network and pre-specify the conditions qualifying for cover. Healthcare specialists are paid directly by the scheme.

Medical Insurance is regulated/governed by the Financial Services Conduct Authority (FSCA) and clients receive a fixed lumpsum when they need funds for a medical treatment/situation. The treatment required or healthcare provider being used have no impact on the amount paid out by the Medical Insurance Company. Rates are determined by the Underwriters to ensure claims can be paid as and when required. Claims are paid directly to the client.

Medical aid contributions are deductible for tax purposes whereas health insurance premiums are not. Currently you can deduct up to R319 monthly for the taxpayer and 1st dependent under a medical aid plan, and R215 for each additional person.

In summary, Medical Aids offer more comprehensive cover than Medical Insurance Plans but are more expensive. Medical Insurance also offers clients more flexibility in choosing cover according to their unique circumstances i.e. affordability.

As one of the first Medical Insurance Providers in SA, Asterio has identified the need to provide a more affordable medical cover which allows someone to  pay for medical treatments when needed.

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