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Choosing a medical scheme for your parents

Nov 23 2017 07:00
Susan Erasmus

Cape Town - Choosing medical cover for your parents is no easy matter. There are several factors to consider such as their medical needs, their financial situation, the facilities close to them and what level of cover would be appropriate.

Medical cover for a parent can cost anything between R1 000 and R5 000 per month, not taking into account late-joiner penalties. It depends on the level of cover (hospital plan or full medical scheme) you choose, and the specific option on the scheme.

Many people who are healthy all their lives suddenly need extensive medical care when they become elderly. Private healthcare is enormously expensive, and few can afford to foot that bill themselves, even if they are wealthy.

In fact, fewer than 10% of retired South Africans can afford to maintain their lifestyle post-retirement, and often high medical scheme contributions is one of the first casualties.

Q. Can I put my parents on my scheme as dependants?

A. Yes, you can. In fact, any member of your family can qualify as your dependant if you can prove that they are financially dependent on you and that you are liable for family care and support.

This includes spouses/partners, parents, grandparents, children, step-children, the child of a spouse, grandchildren and in-laws. Once a child has left home and is self-sufficient and working, they can no longer be registered as a dependant.

Q. Must we all belong to the same option on the scheme?

A. Yes, you do. If you have chosen a specific option, all your dependants have to be on that option as well. You will be the principal member, and your dependants will be listed either as adult dependants or child dependants. On most scheme options, adult dependants pay more or less the same in contributions as the principal member does.

Child dependants usually pay far less, as their medical needs tend to be much lower than those of adults. If your parents join a separate scheme from yours, one of them will be the principal member on that scheme.

Q. What is the principal difference between a full medical scheme and a hospital plan?

A. A full medical scheme covers in-hospital and portions of out-of-hospital treatment, whereas most hospital plans only kick in once you are admitted to hospital. That means visits to the GP and all day-to-day medical treatment, as well as acute medication costs, will be for your own pocket.

But the monthly contributions for hospital plan membership are also substantially lower than those for full medical scheme membership, which may be a consideration if your parents are under financial pressure.

Q. What does it mean when it says a plan covers 100% or 200% of the medical fund rate?

A. That is the rate that a scheme will pay for certain doctors, specialists or procedures. It might be substantially less than the rate private doctors or hospitals charge, so if you can afford it, take the 200% of medical fund rate, otherwise you could be landed with large co-payments for your parents.

Q. How does the payment for chronic medication work?

A. There are 25 chronic conditions for which all schemes (hospital plans included) have to pay. They usually have a medicines formulary listing the medications for which they will pay. These are often generics, which are much cheaper than brand medications – but they are equally effective.

Some schemes have a fixed amount they will pay per condition. You need to register your parents with the scheme if they have been diagnosed with any of these chronic conditions before they can claim for this medication.

Q. Does a full medical scheme pay for all medical treatment?

A. No. If your medical savings account for day-to-day expenses has run out, you could find yourself in a self-payment gap. Until then, a scheme will pay for treatment at registered healthcare providers either partially or in full, depending on your option. Some schemes have above-threshold benefits if you have gone through your self-payment gap.

Q. What is a designated service provider and how will it affect the choice of scheme?

A. These healthcare providers (hospitals and private doctors) are on a network and undertake to charge the medical fund rates. So if you use network hospitals and doctors, there should be no co-payments. Healthcare providers outside this network could charge substantially more, and this will be for your own pocket.

Check to see if there are any DSPs in the area where your parents live – there is no point in paying for medical scheme membership if they are unable to access the care.

Q. Is a hospital plan enough for a retired person?

A. It’s not ideal, but it is a lot better than no cover at all. Most really expensive medical treatments take place in hospital, and a hospital plan will cover your parents for 270 prescribed minimum benefits, which cover 90% of hospital procedures. But as one grows older, medication costs and certain out-of-hospital expenses can become substantial.

Q. What is gap cover and how does it work?

A. This pays a multiple of the difference between what your scheme pays, and what a private doctor or specialist charges in a hospital. This is an insurance product, and your parents need to belong to a scheme in order to qualify for gap cover. Just check, as some gap cover products have a cut-off age for applications. It is not expensive, and can make a real difference in a medical crisis.

Q. What if they have never belonged to a scheme?

A. If your parents have never belonged to a scheme, they can be made to pay up to 75% of the scheme contribution as an ongoing late-joiner penalty.

Q. What if there has been a break in their medical scheme membership?

A. The scheme will calculate the late-joiner penalty based in the number of years that your parents did/did not belong to a scheme. They will need to have the paperwork to prove their membership.

Q. Can a medical scheme refuse to accept my parent as a member?

A. No, they can't, but they can subject them to waiting periods before they can claim: usually a three-month general waiting period, and also a 12-month condition-specific exclusion for the treatment of certain pre-existing conditions.

Q. Does it cost anything to change schemes?

A. No, it doesn't. The only possible costs are if you have to pay for something while your parents are subjected to a waiting period.

Q. Do pensioners pay more or less on contributions than other medical scheme members?

A. Pensioners pay the same as everyone else. A small number of options take income into account when calculating contributions – proof of income will have to be provided.

Q. Do my parents’ former employer/s subsidise their medical scheme contributions?

A. Some do (such as GEMS), but this is becoming rare in the private sector where, increasingly, your scheme contribution is part of your total cost-to-company package. Check whether your parents receive a subsidy from former employers – they could lose that if you put them onto your scheme.

Q. Do I need to consult a medical broker, or can I do my own thing?

A. A broker will be able to give good advice on choosing a scheme if your parents have specific medical needs. It might be worth your while going down this road. Choose someone who has knowledge of a wide number of schemes and their options.

Q. What if we cannot afford anything except state health care?

A. Some state hospitals are good, others not so good. With growing numbers of people depending on state health care, queues and waiting lists for certain procedures can be long. If there is a good state hospital in your area, by all means go down that road, but you will have to exercise patience as a general rule.

Q. Are my parents’ medical expenses tax deductible?

A. Yes, if you are supporting them entirely. But this is not the case if they are furnishing their own tax returns (in which case they will probably not qualify as dependants on your scheme anyway).

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health  |  money  |  medical scheme

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