What are the main differences?
- Medical aid plans are non-profit organisations which are regulated in terms of the Medical Schemes Act (MSA). Hospital plans, on the other hand, fall under either the Long-term or Short-term Insurance Acts, and are sold commercially for profit.
- Medical aid plans belong to their members, while insurance product providers distributing hospital plans are owned by their shareholders.
- Open enrolments apply to “open” medical aid plans, which means they may not turn anyone applying for membership away. However, health insurers can deny cover to individuals deemed to be high risk.
- Medical aid premiums for any specific option or plan can only differ based on income and family size, while in the health insurance environment premiums will be based on the insurer’s assessment of the risk, and may differ from person to person.
- The MSA makes it obligatory for all options on all medical aid plans to cover the cost in respect of the Prescribed Minimum Benefits (PMBs) at cost, in full. The PMBs include cover for 270 hospital treatments and 26 chronic illnesses – with no benefit limit applicable. Hospital plans, on the other hand, will only pay the specified benefits, and will not take the actual cost of the services provided into account.
- Medical aid plans reimburse healthcare services (provided they are covered by the specific plan) based on cost, while health insurance products pay according to the benefit schedule applicable.
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