Completing the wage gap when medical aid plans become unaffordable

While there have been discussions about designing a low-cost medical regimen with a reduced set of PMBs, these have yet to be approved by the board. Photo: Istock

BUSINESS


Medicines remain unaffordable for many working South Africans. According to Gary Allen, managing director of Sanlam Health, an individual should not spend more than 10% of their income on health coverage. Since a basic hospital plan can cost you 1,800 Rand, anyone who earns 17,000 Rand or less per month will find that medical plans are not an option.

For example, a single parent with one child would pay Bonitas R3 360 for a basic hospital plan.

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The high entry costs for medical plans are determined by the Minimum Prescribed Benefits (PMB) set by the Medical Plans Board. This requires that all medical plans cover and pay in full the costs billed by medical service providers. This includes 270 life-threatening conditions and 26 chronic illnesses. The cost to cover this PMB list is approximately R820 per member.

While there have been discussions about designing a low-cost medical regimen with a reduced set of PMBs, these have yet to be approved by the board. In his absence, medical insurance has largely filled the void for people earning less than Rand 17,000 per month.

Health insurance falls under both short and long term insurance laws. An agreement was made with the council, which approved the price and benefit of the design. The idea is that over time, once the low cost plans are approved, these medical insurance offers will be absorbed into the structure of the existing medical plan.

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Sanlam this month launched its comprehensive healthcare offering for the retail market under Sanlam Health Solutions, which combines the different elements of medical coverage, allowing individuals to find a product that fits their pocket. Its healthcare solution includes a primary care medical insurance option, providing for GP visits, medications, pathology, radiology, basic dentistry and optometry, with additional coverage available for accidents. Accident benefit includes hospitalization in a private hospital due to an accident, with coverage up to R225,000 per event and an aggregate annual limit of R1 million.

Coverage starts at R420 through R579 for the primary member. The monthly premium for a married couple with two children, including accident benefit, is R1,468, and a single parent with two children would pay R999.

“The affordable health insurance market is where all of the growth is happening. It goes far beyond standard medical coverage, ”said Damian McHugh, Marketing Director of Momentum Health, which offers corporate clients an integrated medical insurance offering called Health4Me. “We are finding that employers are using this solution for employees earning less than Rand 30,000 per month.”

TYPE OF MEDICAL INSURANCE

Primary health insurance primarily focuses on day-to-day benefits such as general practitioner visits, dental treatment, and medication. It excludes private hospitalization, although in certain cases extended cover can be taken out.

READ: Momentum to freeze increases in medical aid contributions until September 2022

Gap cover insurance is taken out in addition to an existing medical plan in addition to the costs of private hospitalization and specialist. Many members opt for entry-level hospital plans which they then supplement with gap coverage.


Maya Fisher-French