How to compare Medical Aids in 2021

COVID-19 threw a curveball at medical aid schemes in 2020, and they're changing their benefits and costs to cope. Here's what to consider and compare to find out how much medical aid is really going to cost you in 2021.

Medical aid schemes have changed their pricing structures and benefits in different ways in response to the pandemic, which has made understanding how the different schemes compare price-wise a little bit harder.

The pandemic has put pressure on everything, including your medical aid

Ahead of each new year, the Council for Medical Schemes (CMS) must approve each medical scheme's proposed changes to benefit structures and rate adjustments before they can be implemented.

'Grappling with a pandemic that's had a wrenching impact on the economy, the CMS urged medical schemes at the end of 2020 to align with [the consumer price index] when making annual rate adjustments,' says Alexia Graham, a director at Hippo Advisory Services. 'Most medical scheme increases were lower than previous years to allow consumers to stay covered in the current environment. However, some came in at double the rate of inflation.'

Schemes are also legally obliged to maintain a reserve fund of 25% of gross annual contributions to ensure that they have enough liquidity to continue to pay claims. This meant that they had to manage the expectations of the CMS while also reacting to the financial and health strains that COVID-19 had placed on their members.

The CMS did acknowledge that it would find ways to assist medical schemes in maintaining their mandated 25% reserve fund in combination with these lower-than-usual increases.

Comparing medical aid apples and oranges?

South African medical schemes increased overall contributions by between 3.9% (Momentum) and 8.7% (Fedhealth) – lower than their usual annual increases, says Graham.

'Discovery Health deferred their increase until July 2021, with members paying 2020 rates until that point. Indications are that Discovery's overall increase will come in at around 5.9% in July 2020,' she says.

Medical aid schemes have to weigh up various considerations before they decide on the annual price increase, for example the age profile of their members.

'A scheme's ability to play with the number is influenced by its ability to grow, with the right risk profiles. If it's attracting a base of younger, healthier people, it's easier to anticipate reserve growth because, by default, we expect people to need more medical treatment as they grow older,' says Graham.

'A scheme sitting with an older client base therefore needs to be more cautious because it will inevitably be paying out more claims. Medical aid schemes which don't manage the balance of these younger vs older bases could find themselves with some challenges. That's why, for example, Fedhealth showed the highest overall contribution increase – their base is skewed older, so they had to give themselves more room.'

Apple, meet apple

While Hippo's medical aid comparison tool shows like-for-like costs across a number of different schemes and plans, it's important to understand that people need to compare the right costs, too.

'If people look at, say, Bonitas vs Discovery, they need to factor into their calculations the fact that Discovery's rates are effectively 2020's – with a pending increase – whereas Bonitas has already taken the plunge and applied an overall increase of 4.6% this year,' says Graham. 'Also, then, if you're a Discovery Health member and you're looking at a comparison with other schemes, do that comparison in the middle of the year once the 2021 increase has been factored in.'

Graham says that it's important to compare actual premiums across products rather than percentage changes, as a low percentage change to a higher price could result in the same as a high percentage change to a low price.

She also advises that you make sure you've got the best-value medical aid cover and that you understand how your product has changed in these uncertain times. 'If you are looking to compare products across most medical aid providers, Hippo enables you to do this by providing needs-based quotes across various product suppliers that focus on the product elements that should result in best-value buying decisions,' she says.

Visit the Hippo medical aid comparison tool to see how your medical aid plan stacks up against comparable ones – or to find the perfect medical aid solution for your family's needs.