Trevor Schoonraad – Health Manager at Axiomatic Consultants
In 2024, South African employers are grappling with a formidable challenge – the escalating costs of medical aid. The burden of rising premiums has prompted employees to seek alternative solutions to maintain healthcare coverage while mitigating the financial strain on their pockets. This article aims to shed light on the current landscape of medical aid costs, explore the strategies employed by employees to manage these expenses, and provide insights to employers on navigating this challenging scenario.
The Soaring Costs of Medical Aid
2024 has seen a substantial increase in the cost of medical aid from all service providers. Various factors have contributed to this surge, including the rising costs of healthcare services, advancements in medical technology, and the overall inflationary pressure on the economy. In response, medical aid providers have adjusted their premiums, presenting a considerable challenge for both employers and employees.
Mitigating the Impact: Selecting network plans
To cope with the escalating costs, many medical aid members are choosing to downgrade their medical aid benefit options. This involves opting for plans with designated service providers or network hospitals for elective procedures while maintaining cover for major medical events. By making this strategic adjustment, members can keep their healthcare costs within a manageable level. The sacrifice of freedom of choice may be attractive in larger metropolitan areas with several hospitals to choose from.
Reducing Cover for Day-to-Day Expenses
Another common approach employees are taking is to reduce cover for day-to-day medical expenses. This may include primary care consultations, acute and over-the-counter medications, dentistry, and optics. By assuming a greater share of these costs out-of-pocket, members can offset the impact of rising premiums. However, this strategy requires a careful balance to ensure that essential healthcare needs are still adequately met.
Remaining Covered for Major Medical Expenses
Despite the downsizing of benefit options and reduction in day-to-day coverage, employees recognise the importance of maintaining protection against major medical expenses. In a country where healthcare costs can quickly escalate, individuals should prioritise cover for hospitalisation, surgeries, and critical medical interventions. This strategic shift allows members to navigate the rising costs while ensuring financial security in the event of a significant health crisis.
The Increases of the 5 Largest Medical Aid Providers in South Africa
To provide an overview, let’s examine the premium adjustments made by the 5 largest medical aid providers in South Africa:
- Discovery Health: Premiums have increased by between 0% on entry-level plans and 12.9% on higher plans, reflecting the ongoing challenges in the healthcare landscape. Some members previously on discontinued options would have experienced an increase of up to 30% to continue enjoying comprehensive cover.
- Bonitas Medical Fund: Bonitas has adjusted premiums between 3% and 9.6% depending on the benefit option, citing the need to keep pace with the rising costs of medical services.
- Momentum Health: Premiums at Momentum Health have seen an increase of 9.6%, as the scheme navigates the intricate balance between quality healthcare and affordability.
- Medihelp: Medihelp members are facing premium increases of between 13.9% and 17.9% depending on the benefit option, a response to the relentless upward pressure on healthcare costs and lower contribution increases in previous years between 2021 & 2023
- Bestmed: Bestmed Medical Scheme has implemented a 9.6% premium increase, underscoring the industry-wide challenge of providing comprehensive coverage amid economic uncertainties.
Medical Insurance
Another alternative is to replace expensive medical aids with more cost-effective medical insurance. Medical insurance differs from medical aid in several key aspects. Primarily, medical insurance is typically more affordable and is designed to provide entry-level primary care cover within networks, and accidental hospital cover for stabilisation in the private sector.
Primary care enables employees to access day-to-day medical treatment such as consultations with network nurses and general practitioners in the private sector, obtain treatment for acute medical issues, and more effectively manage their chronic conditions but does not cover hospitalisation other than very specific accidental situations.
While the cost savings are attractive, employers contemplating the replacement of medical aid with medical insurance for their workforce should undertake a thorough assessment to ensure that the benefits align with their employees’ healthcare needs. These medical insurance products should rather be seen as a solution for uncovered employees to gain access to some level of private healthcare rather than relying on the overburdened state facilities.
Employers should partner with healthcare consultants or brokers who can offer professional advice on the best medical aid and medical insurance products available in the market, tailored to the specific needs of the workforce.
As employees grapple with the impact of soaring medical aid costs in 2024, the medical aid tax credit will continue to provide relief for another fiscal year.
ENDS
