You may have heard about health insurance, previously known as hospital insurance. At face value these products appear to be similar to medical aid except for a significant price difference. However, health insurance or hospital insurance is not medical aid and vice versa. For adequate coverage, you need both – medical aid and health insurance. One cannot replace the other. Simply, medical aid pays your doctor, the pharmacist, hospital and other medical service providers. Health insurance pays you the policy holder cash for each day spent in hospital.
What is hospital or health insurance?
Health insurance or hospital insurance is just another term for the hospital cash back plan. Along with medical aid hospital plans, these products are broadly referred to as hospital cover. Both products cover you for hospital-related expenses but in different ways.
A medical aid hospital plan will cover your hospital stay, medicines, tests, consultations and treatment while you are hospitalised. It pays according to the NHRPL (National Health Reference Price List) as per specific tariff codes for different procedures. The doctor or hospital may be paid directly or you may be paid and will then have to settle the service provider.
Health insurance pays a flat daily amount for each day in hospital as cash in your hand. The payout is dependent on the duration of your hospitalisation, and not on the procedures that you underwent.
Comparing Benefits
As with any product, it is important to compare “apples with apples”. You cannot compare health insurance and medical aid hospital plans solely on the price of each product. Instead you have to look at and compare the benefits.
Medical aid is structured in a way that covers the medical expenses you accrue while in hospital. These days many doctors charge higher than NHRPL rates so you will have to settle the difference between what your medical aid pays and what your doctor demands. It will either have to be paid in cash or if you have medical gap cover then this policy will settle the shortfall.
Health insurance pays out a cash amount as determined by the level of cover that you opted to buy. It can pay anywhere from a few hundred rands per day of hospitalisation to several thousand rands. The higher the level of cover, the higher your monthly contribution and the higher your payout when you are eligible to claim.
Medical aid keeps somewhat in line with the medical expenses you may accrue, minus shortfalls from doctors claiming higher rates. Health insurance does work in line with your medical expenses you accrue. This means that while you could end up with money in your hand after settling all your medical bills from the payout you received from your hospital insurance. But it could also mean that your health insurance payout will in no way match your medical bills.
Choosing Between Health Insurance And Medical Aid
Make sure that you understand the difference between these products and choose the one that suits your needs. Ideally you should have both types of cover. Medical aid is generally more expensive but when you look at the benefits, it can protect you against the very high cost of private healthcare in South Africa. Health insurance on the other hand can also help you pay the medical bills but it also protects you personally against the financial loss you may incur while being in hospital.
Medical aid will only pay for the procedures you undergo and you may never receive any cash in your hand if all your service providers are paid. Even if your medical aid pays you, you will have to pay all the service provider’s bills. The money is essentially not yours. Health or hospital insurance pays you money and what you do with it is up to you. Obviously you should use it to settle medical bills if any. But any remaining money is for you to spend as you please.