Medical scheme benefits seem to get more complicated as the years go by, and we appear to be getting fewer benefits for the amount of money we pay every month. That is why it is important to make sure you choose the right model for your needs. Do we choose a Traditional or New Generation Medical Scheme?
While a savings-type option (what those in the business call a New Generation option) might be perfect for a young and healthy individual, it might be a catastrophic choice if you didn’t consider the advantages and disadvantages before signing up.
Below are a few points to consider when deciding about whether you want a Traditional Medical Aid or a New Generation model.
What is the difference?
Traditional medical schemes give you a set amount of benefits for a certain benefit category – for example, you can have ten GP visits, two basic dentistry visits, one optometry visit and R5 000 per year for medication. Once you have used up your GP visits, you will have to pay out of your pocket for visiting the GP for the rest of the year – but you can still get your medication from the pharmacy, and visit the dentist or optometrist.
A New Generation option works according to an amount of money debited to your medical aid account at the beginning of the year, and you then decide how and when to use the money, for any out-of-hospital expenses, including GP’s, dentistry, optometry and medication. For example, if you are allocated an amount of R10 000 per year in your savings, there is no limit to what you can spend the money on – but once it’s finished, you generally have to self-fund the rest of your day-to-day medical expenses.
Which option will suit me?
Traditional medical schemes are generally better for:
- Families with young children, who visit the GP or specialist on a regular basis, and have to claim for medication, take the children for dental check-ups, claim for blood tests and x-rays – in short, families who use a wide range of benefits will be more suited to a traditional option.
- Families where dentistry and optometry benefits are important and you want peace of mind that each member of the family can have two dental check-ups and one optometric check-up every 24 months.
- Higher-claiming families.
Advantages: Wider range of benefits, running out of one benefit will not influence the other benefits, you know exactly how much benefits you have for which category at the beginning of the year.
Disadvantages: If you don’t use the benefits, they do not get carried over to the next year, you may pay for benefits you will never use.
New-Generation schemes will suit:
- Healthy individuals, who don’t need too much day-to-day cover, but want peace of mind that if they do visit the doctor or the dentist a few times a year, the cost will be covered.
- Families with older children, where it is not necessary to visit the doctor at the slightest sign of the sniffles and where over-the-counter medication will suffice.
- Individuals who seldom visit the doctor or buy medication but who have extensive dental or optometry expenses – where the amount claimed will not be prescribed by sub-limits within your day-to-day benefits, but rather by the amount of savings available.
Advantages: You have the freedom to choose how you want to spend your savings, any unused portion is carried over to the next year.
Disadvantages: Once the savings are depleted, you have no benefits for any category for the rest of the year, one family member could spend the entire family’s savings, leaving the rest without cover, requires a large degree of self-discipline to not over-spend at the beginning of the year.
Once you understand the difference between the two models, you will be further exasperated when you realise that there are also hybrid-models (a combination of New Generation and Traditional) on the market! Choosing the right option for your family’s needs is not an easy decision, and the best way of ensuring that you do not end up paying for a medical aid which does not meet your needs is to talk to a Medical Aid specialist for advice when choosing a scheme and an option.
By: Vanessa Roux (Financial Advisor)
