Navigating medical scheme annual increases

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This interview was originally aired on RSG Geldsake in Afrikaans. The transcript below has been translated into English.

TINUS DE JAGER: Medical schemes have announced their tariff increases over the past few weeks. These increases place further pressure on household budgets, while the government is making considerable progress with planning for a state-controlled public healthcare system.

To discuss what these adjustments mean for consumers and how to choose a suitable plan, we are now talking to Tobie du Preez, CEO of Agile Alternative Business Solutions.

Tobie, good afternoon, welcome to the programme. Over the past few weeks, various medical schemes have announced their tariff increases. What do these adjustments mean for consumers’ monthly expenses?

TOBIE DU PREEZ: I think simply the fact that announcements are made by the schemes and presented in the press as a percentage can often confuse the public and members of medical schemes a bit. I think to put this into context, one should actually start by looking at what the Registrar of Medical Schemes announced.

Around 31 July this year Circular 20 was issued, which provides guidelines for medical schemes on what they think their tariffs should increase by for the following year, 2027. The registrar put a percentage of 3.8% there.

Now, that still doesn’t make it clear; it actually confuses the man on the street a bit more.

What we did see is that when the schemes announced their tariffs – and this took place from mid-September to around the first week of October – the top 13 open schemes announced an average increase of between 7.35% and as much as 10.79%.

Now, that gives an average of just above 8% that the schemes increased.

The question is, what impact does this have on the consumer and the member of a scheme?

Well, number one is that if you look at the current economic situation with the price of electricity and now what is happening with the petrol price which is going up again, current scheme members are under tremendous pressure at home.

When they then see that medical schemes are actually increasing by more than normal inflation, that is concerning.

What happens then is, if members are not subsidised on their membership fee it means a larger portion of their disposable income will go toward their medical scheme. So what should the member do after hearing this?

The first thing is, when I do the percentages I see a weighted average increase per scheme. That means it is not necessarily the increase the member will experience on the option they are on. There you will see that the options within the schemes have increased from about 6% to sometimes almost 10.5% or 11.5%.

So every member will have to go and look at their option and will have to look at their scheme to ask whether they can change options.

They can do that if they give notice to the scheme by the end of November for 1 January – which is when the financial year starts, on 1 January. They start the new financial year with their full benefits that they can then use; then they can change options, or naturally they will have to look at an alternative medical scheme if their scheme is no longer applicable to them.

TINUS DE JAGER: But it is difficult to change from such schemes; you have to go through all kinds of tests. The best option is probably to take a close look at the one you have.

How does one go about choosing the right fund and specific plan for your needs?

TOBIE DU PREEZ: Well, I agree that one should first look at your current medical scheme to see what is there, because as soon as you consider moving to another scheme, you are exposed to underwriting. You can be subjected to waiting periods and late-joiner penalties.

The simplest step is to look within your scheme. And when you look within your scheme, medical schemes usually offer a whole product range, and that product range addresses different needs.

What we do see is that many members find themselves on the wrong options, but they don’t evaluate every year in November – just after the schemes increase their tariffs – whether they are on the right option.

They just stay on the option they are on, and then that option just becomes unnecessarily expensive.

The problem is that the complexity of understanding your scheme and the option you are on is sometimes quite a problem, and it can perhaps help quite a bit to get expert advice.

And in many cases it can actually help people a lot and save money to be able spend time once a year to look at what happened in their option, because it is not just the tariff that changes on 1 January.

What few people realise is that a lot changes within the options. A lot means: one, your tariff, and two, they can look at the composition of your option.

Your day-to-day benefits could move from risk benefits to a savings account – or, as is happening more and more nowadays, schemes implement managed healthcare measures to better manage the option, and these are benefits like hospital networks.

That then means you no longer have the freedom of choice to go to any hospital; you have to go and check how big your hospital network is, and what it entails.

They introduce co-payments, they can introduce formularies, and they can introduce preferred service providers.

Now, all these factors impact your option every year, and I think it is important, if a member takes note of this, it makes them very aware of what they are paying for.

But the other factor that must be kept in mind is family composition.

Schemes are much more sensitive now to offering more cost-effective options for younger members to lure them into the system, to accommodate them within medical schemes.

But family compositions are not what society used to be. It is no longer always a traditional husband and wife and two children; we also now have single parents who are adults with children. Then you also have blended families where the grandfather and grandmother are also on the medical aid – and that changes the usage of the option you choose quite dramatically.

I think if you look at that, schemes have gone further and said, ‘Well, how do we accommodate larger families?’

Many schemes then just charge tariffs for the first two or three children; they don’t necessarily charge more if there are four or five children.

It is also important to have that scheme option when children leave school and go to study. Traditionally, if you studied you could stay on the medical aid if you were a full-time student – up to the age of 21.

Now, in some schemes the child can remain a dependant without proof of being a full-time student up to the age sometimes of 27 – and pay a child tariff.

So these are all measures that I think the average person may not always be aware of, and then of course there is the range of options from income-based hospital plans, savings accounts, comprehensive plans to traditional plans.

I think that is where good advice can guide a person.

TINUS DE JAGER: That was Tobie du Preez, CEO of Agile Alternative Business Solutions. Tobie, thank you for your time.

Bonitas, the medical fund for South Africa, find your plan at bonitas.co.za.

Get the care you need when you need it with Bonitas, the medical fund for South Africa. With strong reserves and financial performance, Bonitas can afford to pay your claims. Choose from a range of plans tailored to your needs. Visit bonitas.co.za and find your plan.

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