A hospital plan can at times be a confusing financial product to South African consumers. All too often the term is used loosely by media agencies in the advertising of these products and consumers may sign up for these products without being sure of what they are buying. The South African financial services market is diverse, and there are products that often overlap. However, in most cases, a hospital plan in South Africa refers to one of two products – a medical aid hospital plan or a hospital cash back plan. Do not let the word ‘hospital’ detract from the fact that these are two totally different financial products.
Cover to Pay Your Hospital Bills
Medical aid hospital plans covers your hospital bills for medical related services. It does not have out-of-hospital benefits and chronic medication is usually included in this hospital plan. Simply it is financial protection against the exorbitant private health costs in South Africa. You do not get any cash in your hand and the hospital is usually paid directly by the medical schemes. Medical services are paid according to the National Health Reference Price List (NHRPL). Most of us simply refer to this price list as the ‘medical aid rate’.
These days many doctors charge private rates which many schemes do not cover. The patient is then paid the NHRPL rate and has to then pay the doctor, along with the additional fees from their own pockets. Fortunately the financial services industry in South Africa has been quick to offer products to help protect medical aid members – some medical schemes do pay up to a certain percentage above the NHRPL or you can opt for medical aid gap cover to make up for the shortfall from the scheme’s payout.
Money for Being in the Hospital
A hospital cash back plan is a totally different type of product from a medical aid. It helps those who are hospitalised with money paid directly to them which can be utilised for any purpose they choose. In other words, the money you are paid from a hospital cash back plan can be used for personal expenses or medical expenses. The insurance company does not monitor how you use this money. Neither the hospital nor the doctor is paid directly by a hospital cash back plan. You can use the money to pay for the medical expenses you incurred by being in hospital if you so wish.
The reality is that being hospitalised can be a huge financial burden to a person above and beyond the hospital and medical costs. Should you have exhausted all your sick leave, then you will unfortunately have to take unpaid leave from work for being in hospital. This means that you are not going to be paid your salary for those days that you are in hospital. At the end of the month it will severely compromise your financial position. This is where a hospital cash back plan protects you. It can also help you partly fund your medical expenses but it in no way replaces a medical aid.
Admission for Hospitalisation
When you are hospitalised in a private institution, you need one of two things – sufficient cash in your hand for the hospitalisation fee and often a line of credit in the form of a credit card, OR, a medical aid. Cash admission fees for South African private hospitals are expensive – you can expect to pay anywhere between R5,000 to R15,000 before the hospital will even take you in. If you are having a heart attack, some private hospitals may demand as much as R50,000 upfront. However, with a medical aid you are financially protected and the hospital will admit you immediately because they know that your medical aid will pay them for almost all the costs.
Private Hospital Admission Fee
Private hospitals in South Africa will not accept your hospital cash back plan as a form of security. Even the promise of paying the hospital once your hospital cash back plan pays you will fall on deaf ears. Remember that insurance companies selling hospital cash back plans have a deferred period – this means that they will not payout unless you are hospitalised for more than 2 to 3 days. Medical aids do not have this restriction and start paying from the moment you are hospitalised for legitimate medical reasons. If you are familiar with the costs of private hospital care in South Africa then you know that you can be paying about R2,500 per day in hospital without even settling the doctor’s bill, lab tests and so on.
These differences in benefits does not mean one hospital plan is better than the other. There are different types of hospital plans for a reason and if you can afford it, you should have both – a medical aid and cash back plan. One pays the hospital bills and doctor’s fees while the other puts money in your hand for you to pay for any shortfalls in your income. With the high cost of private health care and the rising cost of living, both plans can prove to be a financial lifesaver when you are in hospital.