The concept of medical insurance

What is Medical Aid?

Medical aid is a form of insurance where members pay a monthly contribution in return for financial cover for medical treatment or related medical expenses when the need arises.

How does it work?

  • An individual should have joined a medical aid scheme or society, which is a collective facility where different members join to pool together their financial resources to meet the costs of a sick member in times of need.
  • All people with a regular source of income are eligible to join medical aid.
  • Ideally people should join medical aid before they reach the age of 65. This is to enable them to contribute meaningfully into the pools. After attaining 65 years, it becomes unfair on other members who would have contributed over the years, more so because with age comes poor health.
  • When a patient accesses healthcare services, the service provider submits the claim to the respective medical aid for payment. Claims may be submitted either as physical copies or electronically.

The medical aid assesses the claims to ensure that the claim is for a bona fide member and that the services have been rendered by a bona fide healthcare practitioner.

In some instances, claims are paid in full, while in other instances claims are shortfalled for reasons that the medical aid usually explains in their remittance advice.

What is a shortfall?

This refers to the difference between what a service provider charges a patient on medical aid for treatment and what the member’s medical aid society pays in terms of its rules and in terms of an agreed fee structure. If the service provider’s cost is greater than the set fee, the excess becomes a shortfall which the service provider may collect from the patient or may choose to waiver.

World over, medical aid usually does not always pay in full, however the shortfall amounts should not be more that 20 percent of the total cost. In an inflationary environment, shortfalls tend to become common and exorbitant.

This happens when service providers change their fees based on indexing and the movement of the exchange rate.

On the other hand, medical aid contributions cannot be changed daily in line with the exchange rate.

This is because there is need to notify the members/employers of the contribution increase and the members/employers must first agree before implementation of the increase.

In many instances, members/ employer organisations resist contribution increases citing affordability challenges. This leaves the medical aid without sufficient funds to increase the fees, thereby resulting in huge shortfalls which exceed half of the total bill at the point of care.

This is inconvenient for the patient. Such a situation can be alleviated by regular contribution reviews, especially in an inflationary environment, as well as engaging the service providers.

Patients may also enquire from their medical aid for assistance. The medical aid call centres should have answers on where their members can access services at minimal or no shortfalls.

Why is medical aid coverage important?

In today’s world, healthcare costs are extremely high and just one day in a private hospital or one operation can deplete any emergency funds people may have.

Medical aid coverage also helps members look after their family and focus on early treatments as opposed to waiting until someone is really sick.

Members have the preference of going to an institution of choice.

  • It should be noted that there is a trade-off between what is paid in contributions and the cover enjoyed, and a member cannot expect to have the highest level of cover when they are paying the lowest contributions. The less a member pays the less freedom of choice of healthcare provider and treatment they get.
  • Individual health and that of family, holds immeasurable value. Illness, like death is the least predictable factor in life. This unpredictability is precisely what makes medical aid so important, because one cannot tell for certain when they or their loved one will fall sick. It is best that people prepare themselves from unexpected health mishaps by belonging to a medical aid society of own choice.
  • People should live healthy and productive lives before they die. This means that people should prioritise their health by being on medical aid.
  • Life is for the living. Therefore, everyone should live a life before dying. Invest in living!

Article written by: Association of Healthcare Funders of Zimbabwe (AHFoZ)

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