The term ‘hospital plan’ is often confusing for most South Africans. There is talk about medical aids and insurance companies, getting cash for being in hospital and a host of jargon that flies above the head of most consumers. However, it is not all that confusing when you know the basics. A hospital plan usually refers to a type of medical aid plan or a type of insurance policy with cash payouts. In fact the financial products should more appropriately be referred to as a medical aid hospital plan or a hospital cash plan.
How do hospital plans work?
The ways in which a hospital plan protects you differs depending on whether you are talking about a medical aid hospital plan only or a hospital cash back plan. Remember that these are two different products with different benefits. It therefore protects you and assists you in different ways.
Quite simply, a medical aid hospital plan pays for your bills when you are in hospital. This includes the cost of being hospitalized, fees for doctors and other health care practitioners, blood tests and investigations as well as medication and prosthetics needed when in hospital or undergoing surgery.Essentially medical aid is a form of financial protection against the costs of medical care.
On the other hand, a hospital cash plan is an insurance policy that pays out when you are confined in a hospital. You may be undergoing tests or observation, or having surgery – whatever the case, you get a cash payment for each day in hospital. A cash plan is not a medical aid. It will not pay you for medical services but you can use the cash you receive for personal expenses or your medical bills.
How much do hospital plans pay?
As these two products – medical aid hospital plan only and hospital cash plan – are different, the payout policy also differs.
Medical aid pays for medical costs. The rates for these services and products are decided upon by the Department of Health in conjunction with the Council for Medical Schemes and Board of Healthcare Funders (BHF). It is known as the NHRPL or National Health Reference Price List. Some doctors charge more and better medical aids may pay for this higher rate when in hospital. Otherwise you will have to pay the difference in cash. Medical aid hospital plans also pay for chronic medication even when you are out of hospital. The costs of these medicines are determined by its NAPPI code and there is an annual limit. Serious chronic diseases are covered unlimited for the year under the Prescribed Minimum Benefits (PMBs).
Hospital cash plans pay out for each day in hospital, usually excluding the first three days in hospital or at least requiring you to be in hospital for more than three days. The amount paid out depends on the policy you buy. Cheaper policies may payout about R1,000 per day while more expensive policies will give you around R5,000 per day. You will only be paid once you are out of hospital and can prove that you were hospitalised. You as the patient will be paid directly – your doctor or the hospital will not be reimbursed by the insurance company.
What is the cost of a hospital plan?
A medical aid hospital plan can cost as little as R600 per month per adult member. Better medical aid cover will cost more and full or comprehensive cover with out-of-hospital benefits are significantly more expensive. There is usually no medical aid hospital plan that is cheaper than another scheme’s similar offerings. Consumers often become confused about pricing because they do not compare the benefits of each plan when looking at prices from different schemes.
A hospital cash plan starts from as little as R100 per day and is sometimes cheaper when you but is jointly with other cover like dread disease, disability and physical impairment. These policies are broadly referred to as health insurance and are not medical aids. Unlike medical aid, the cost of a hospital cash plan can vary from person to person depending on their pre-existing health conditions and even their age. Medical aid prices stay the same irrespective of your medical history although you may pay slightly more for joining a scheme later in life.
Which is the best hospital plan?
There is no way to say that a medical aid hospital plan is better than a hospital cash plan. They are both two different financial products. It depends on a person’s needs. Ideally a person and families should have both – a medical aid hospital plan, if not a full comprehensive medical aid cover, and a hospital cash plan. However, this is not always affordable. The best hospital plan depends on the individual and their affordability – if you can buy more cover and have more benefits then it is better to do so. However, one should not opt for a plan that they cannot afford. It is pointless having the more expensive or “best” plan when you cannot keep it going in the long term.