Medical Aid vs. Hospital Cover
How Medical Aid Works
Medical aid is a non-profit product that provides cover for medical expenses. The level of cover you get depends on the plan you choose. Different companies offer different options.
Some plans offer basic cover for hospitalisation only. Others give you comprehensive cover for hospitalisation and day-to-day medical expenses. Some plans can even limit the cover you get to a specific amount per year.
What is a Hospital Plan?
Hospital cover can mean one of two things. First, it could be a type of medical aid option that only offers cover for hospitalisation. This leaves it up to the member to fund day-to-day medical expenses from his or her own pocket.
It could also be an insurance product sometimes called a hospital cash policy. This type of hospital plan provide a certain pre-specified amount for specific health events. For example, R500 paid to the policyholder for every day spent in hospital.
These hospital cash policies differ from medical aid in that they provide only a pre-specified amount for a health event. There is no guarantee that the amount will be sufficient for the cost of the treatment.
Medical aid benefits work on an indemnity basis. It pays out a benefit equal to the actual cost of the treatment incurred. Medical aid companies usually determine the rate, and it might be lower than what the doctor charges. In this way, they attempt to mitigate doctors overcharging for procedures. Unlike hospital cover provided through an insurance policy, the Medical Schemes Act governs medical aids. Hospital cash policies are regulated by the Short Term and/or Long Term Insurance Act.
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