G and S Insurance Consultants

MEDICAL AID INCREASES: EXPLAINED

Medical Aid increases have most of the population in full blown panic, because with the steep rise in costs for basically everything that we as consumers do and need daily, an increase in medical aid premiums suddenly changes a need to a disposable expense.

Medical scheme increases are generally higher than Consumer Price Index CPI, which stood at 6.79% in January 2017, because it is linked to medical inflation. Medical inflation can usually be expected to be at least 2-5% higher than that of inflation and can be seen in all medical schemes globally.

This higher medical inflation is mainly due to high increases in healthcare service provider fees, the rising incident rate of disease, increased benefit utilisation, new and more advanced (also more expensive) medical technology, the development of medicines, the requirement to maintain reserves of 25%, and finally much-needed benefit enhancements.

Remember that medical aid schemes work on the concept of risk pooling, where a member’s risk contribution is based on the expected medical and non-healthcare expenses, as well as the returns expected from the scheme’s assets. Thus, contribution increases are expected when a scheme cannot carry the weight of the expenses with the current premium incomes.

To stay or not to stay

Medical scheme contributions can form a great contributor to a family’s monthly expenses and premium increases are not taken lightly. And maybe because schemes announce their increases towards the end of the year, at a time when you realise that the December holiday expenses are coming, it’s even worse.

Don’t change to another scheme or plan just because the premium increase of it is lower than your current option. To get the best value for your money, compare the benefits, exclusions, added value and service delivery and how it will cover for your specific needs.

Maybe even more than with other “insurance grudge purchases”, a medical cover can be quite a lifesaver if you need proper medical care.

The following table shows the 2018 contribution increases for the major South African Medical Aid Schemes:

  • Discovery Health Medical Scheme: 7.90%
  • Bonita’s Medical Scheme: 8.70%
  • Genesis Medical Scheme: 5.80%
  • Keyhealth: 8.60%
  • Medshield: 10.9%
  • Momentum Health Medical Scheme: 8.30%
  • Resolution Health: 9.60%

Keep in mind that the average increase doesn’t mean it is the same increase on all options – it is the median over all the options.

Give us at G&S a call and we’ll ease your mind in these troubled financial times.