Health Insurance or Medical Aid – Differences, Pros and Cons

As a student you may not have a thorough understanding of the different products that fall under the umbrella of medical or health cover. There are three distinct products that seem similar but are significantly different. This is medical aid, health insurance and medical insurance. We are going to look further into these products and consider the pros and cons of each type of cover.

Health and Medical Insurance are NOT Medical Aids

It is important to clarify that health insurance and medical insurance are not the same as medical aids. Health and medical insurance cover specific events whereas medical aid covers the cost of private healthcare according to specific tariffs.

• Health insurance pays a cash sum for each day that you are in hospital for legitimate and necessary medical care. This type of cover was previously known as hospital insurance or hospital cash back plans. There are no some added benefits like lump sum payouts for dread diseases and accidents.
• Medical insurance is largely the same as health insurance with additional cover. Apart from the hospitalisation cash payouts and dread disease or accident cover, medical insurance may also pay for daily medical care up to a certain limit and only for seeing certain healthcare professionals.
• Medical aid pays for certain medical procedures, healthcare consultations and medication. A medical aid hospital plan will only cover these bills if you are hospitalised. With day-to-day cover (also known as out-of-hospital cover), the cost of medical care when not hospitalised may also be covered to certain limits.

What are the differences?

Let’s look at a simple example of how each of these products work. Assume that your tonsils needed to be removed and you want to have this surgery in a private hospital.

A medical aid will cover the cost of the hospital stay as well as the surgeon’s fees for performing the operation and the associated costs of materials and medication. However, if your surgeon charges higher than medical aid rates then you will either have to cover the difference between what your doctor charges and what the surgeon demand or you will need gap cover that pays the shortfall in the medical aid payout.

Health insurance will only pay for each day in hospital, after the surgery has been done. This payout may not be enough to cover the medical costs or at times it can be more than the hospital and surgeon costs. However, you will either have to have medical aid or pay cash to the hospital and surgeon before the surgery can be done.

Medical insurance may also provide a daily cash payout like health insurance. Some medical insurance plans may also provide a large cash payout at the time of hospital admission to ensure that a private hospital will accept you. However, this guaranteed hospital admission fee may not cover all the hospital costs and surgeon’s fees.

Due to these differences, private hospitals in South Africa will only admit you into their facility if you have medical aid cover or can pay a cash deposit upfront. Health insurance will not guarantee you admission. Medical insurance may help you gain admission into a private hospital but may not cover all of your costs.

Advantages of Different Medical Cover

Medical aid is often seen as the better cover and this is understandable when you consider the scope of cover. However, medical aid cover is not cheap. It is usually the more expensive type of cover and this is one of the biggest disadvantages, especially for students.

Health insurance is usually the cheapest cover. Despite this distinct advantage over the other types of cover, it also has the most limited benefits when it comes to covering your healthcare costs. Nevertheless, it offers some degree of financial protection for medical care.

Medical insurance is often significantly more expensive than health insurance but not usually as costly as medical aid cover. However, it also falls short on benefits, especially when you need medical care for serious conditions in a private hospital.

The choice of medical cover depends on our individual needs and your budget. It is important to understand that health or medical insurance are not medical aids and cannot offer the same degree as cover, despite what may be said at the outset. If medical aid is a requirement then you will have to speak to a medical scheme and find a suitable option. However, if you want some degree of medical care and have the cash to pay for your care to some extent then health insurance or medical insurance may suffice.

References

1. Medical insurance vs. a medical scheme. Health24.com
2. The Relative Merits of Medical Scheme and Health Insurance. Key Health