Many people think that medical aid schemes and medical insurance are the same, but they are actually quite different. Understanding these differences can help you choose the right type of healthcare cover.
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Medical aid schemes: What do they cover?
Medical aid schemes are like big groups that collect money from all their members to help pay for medical bills when someone gets sick. They follow the Medical Schemes Act of 1998, which means they are regulated by the government and must offer certain essential benefits, like treatment for chronic conditions (e.g., diabetes, asthma), hospital stays, and emergencies.
A key rule with medical aid schemes is they cannot refuse anyone membership even if you have a pre-existing condition. However, they might not pay for certain treatments right away, or they may have a waiting period for specific procedures.
According to the Council for Medical Schemes (CMS), “Medical aid schemes also have to cover some treatments, called prescribed minimum benefits (PMBs), which includes care for 26 chronic diseases and hospitalisation.” So, even if you’re seriously ill, a medical aid scheme must help cover certain important treatments.
How does medical insurance work?
Medical insurance, on the other hand, works differently. It doesn’t provide as wide of a cover. Instead, it pays out a fixed amount of money when something specific happens, like if you get hospitalised or need certain medical procedures. The money you get may not cover your full medical bill—it’s just a set amount to help cover part of the costs.
“Medical insurance is more like a financial product that gives you a lump sum when you need it, but it doesn’t cover things like chronic diseases or offer as many benefits as medical aid,” says a representative from CMS. Medical insurance doesn’t have to follow the same strict rules as medical aid schemes, so it offers less protection overall.
What about costs?
The way costs are calculated is also different. With medical aid schemes, the price you pay each month depends on the type of plan you choose and the number of people on the plan (for example, if you have a family). Everyone on the same plan usually pays the same.
With medical insurance, your monthly payments depend on your health and age. Older people or those with health problems might have to pay more because insurers see them as higher risk.
In short, medical aid schemes provide a lot more cover, especially for serious conditions and long-term care, while medical insurance offers limited payouts for specific events, like hospital stays, but won’t cover everything.
Given these differences, is having a Medical Aid or Medical Insurance better?
It is imperative that whatever option you eventually choose not only suits your pocket but also reflects your total healthcare needs and gives you the best health outcomes. Medical aid scheme company, Medshield says: “In our view, medical aid should always be the default healthcare option, coupled with a Gap Cover insurance policy instead of medical insurance to provide a well-rounded healthcare safety net.”
