By Laura du Preez (Personal Finance)
If you are looking for cover for your healthcare needs, be sure you understand the difference between medical scheme and insurance cover.
Hospital cash plans are very prevalent among the numerous health insurance policies that are being marketed aggressively while uncertainty prevails over the future regulation of medical insurance.
It is easy to confuse hospital cash plans with the hospital plans offered by medical schemes – and there are big differences between insurance policies and medical scheme plans.
Hospital cash plans pay out a cash benefit if you are hospitalised. The benefit is typically based on the number of days you spend in hospital.
Originally sold by short-term insurers, hospital cash plans are now also being offered by life companies.
Products are priced from R100 a month, and the benefits range from R200 to R5 000 a day in hospital. They are often offered with cash-back benefits for people who are fortunate enough not to have to claim on them.
But beware: the benefits are very often woefully inadequate to meet the bills for private hospital care, especially if you need high care or surgery.
Even the highest values on policies that pay a fixed amount per day in hospital do not cover the costs of your being admitted to an intensive care unit, Mark Bishop, the head of business services at Netcare, says.
Another common health insurance policy pays a stated benefit per health event and has an annual limit, he says. However, in a motor vehicle accident in which you sustain multiple trauma injuries, you may use up the entire benefit in one day, Bishop says.
Many policies have very low limits of, for example, R50 000, whereas anything less than R200 000 is inadequate for a major accident, Bishop says.
Medical schemes, on the other hand, will pay your actual medical costs, although these may be limited by an overall annual limit or a sub-limit on particular benefits.
Medical scheme hospital plans focus on hospital and major medical benefits, and exclude most day-to-day cover. But a big difference between insurance policies and medical scheme options is that schemes are obliged by law to offer the prescribed minimum benefits (PMBs).
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