A hospital cash back plan pays you for every day that you are in hospital. It is not a medical aid and will not have the benefit of the in-hospital medical aid cover. In other words, hospital cash back plans will pay you cash but will not be accepted by any hospital or doctor as a means of reimbursement for medical services. This confusion abounds in the South African market where unknowing consumers sign up for hospital cash back plans with the misunderstanding that it is similar to a hospital plan medical aid. It is therefore important to understand the benefits and pros and cons of a hospital cash back plan with payment for each day of hospitalisation.
Benefits of Cash Back Plan
The obvious benefits to this type of insurance cover is cash in your hand for each day you are in hospital. You can use this cash as you please, for personal expenses or your medical bills. However, you will have to claim only after being discharged and paid thereafter. Most hospitals and doctors will not accept these types of hospital cash plans as a medical aid.
With a hospital cash back plan, you will receive :
- Cash in your hand for every day that you are in hospital. Some plans may exclude the first 3 days of hospitalisation.
- Cover for pre-existing diseases and maternity benefits.
- Additional cover for accidental death or disability.
- Sometimes built-in funeral cover.
However, the benefits may vary to some extent among insurance providers. The core benefit is the cash in your hand that you are given for being hospitalised. The cash amount that you receive per day is dependent on the policy that you purchase. Some plans offer as much as R5,000 or more per day but this is dependent on the policy you buy. More expensive plans will offer more benefits that cheaper plans. Benefits may also differ between adults and children if you cover your entire family. In other words, you will be paid less per day if your child is hospitalised compared to the amount paid if you as an adult is hospitalised.
Pre-existing Conditions and Illnesses
Most hospital plans cover pre-existing ailments. This means that if you have diseases such as diabetes mellitus (sugar diabetes), high blood pressure, high cholesterol levels ornd arthritis to name but a few common chronic ailments then you can still qualify for cover. However, it is important to read the fine print with regards to pre-existing conditions. You may have to pay slightly more for your plan by buying hospital cash back cover when you have a pre-existing illness. You may also need to verify that your condition is being appropriately managed by a medical professional. A waiting period may also apply during which you cannot make any claim if hospitalisation was related to the pre-existing disease.
HIV and Pregnancy
Two major issues that often concern the South African consumer who is looking at a hospital cash back plan is pre-existing conditions like HIV/AIDS and pregnancy. Although an HIV positive person can join a hospital cash plan, there several stipulations in the policy that needs to be considered. The criteria may differ among insurance providers and needs to clarified at the outset.
Maternity benefits are also a part of these hospital casch back plans but here as well it is important to read to fine print. You will not be covered childbirth if you join the plan while already pregnant. This is the same exclusion as a hospital plan medical aid for pregnancy. Furthermore, hospital cash back plans may not cover you if you stay in hospital for less than three days, which is the average duration in most cases.
Medical Aid Alternative
Contrary to popular belief, hospital cash back plans are not a new form of insurance. It has existed in the South African market in some form or the other for well over 20 years. However, it has been in recent years that insurance providers have become prolific about marketing this type of insurance. This creates the misconception that hospital cash plans are a new product and an alternative to medical aid. This is untrue. In fact hospital cash plans and related hospitalisation cover are the predecessor of the medical aid that we know today.
A medical aid is a form of protection against medical expenses and will bear the costs of hundreds of thousands, and sometimes even millions of rands when you fall ill and need medical care. A hospital cash plan is simply a form of personal insurance for when you are incapacitated in hospital to reimburse you for the loss of income or inconvenience of being hospitalised. The hospital cash plan is not an alternative for medical aid. It has distinct benefits and puts cash in your hand where medical aid does not. The bottom line though is that a hospital cash plan and a medical aid hospital plan are separate financial products.