Mastering your medical scheme’s self-payment rules

Members signing up for top-of-the-range medical scheme options often mistakenly believe that all their claims, bar those of a stated rand amount in the “self-payment gap”, will be covered.

But you may find the self-payment gap is higher than the amount you expect to pay because of health-care choices you make and the fine print in the rules of the scheme.

And even once you have breached the self-payment gap and think you are in the clear with your claims, you may find the same rules apply to your above-threshold benefit, resulting in you having to dig into your pocket again.

The only way to avoid this is to understand and play within the rules, but many members are blissfully unaware of them, Victor Crouser, the head of health care in the coastal regions at Alexander Forbes Health, says.

Comprehensive medical scheme options typically offer a medical savings account to which some of your contributions are channelled for you to spend on out-of-hospital day-to-day medical claims such as visits to a GP, acute medicines, optometry and dentistry.

But as there is a risk that you could exhaust your medical savings account during the year and be exposed to high claims if you or any dependants are seriously ill or injured, comprehensive options offer a safety net in the form of an above-threshold benefit.

On these options, once you deplete your savings account, you pay some claims yourself while you are in the self-payment gap and then once you reach a specified threshold, the above-threshold benefit pays your claims. The threshold above which the benefits apply is the sum of your contributions to your savings account plus the self-payment gap.

Jill Larkan, head of health care at GTC, says you should think of it as a second unlimited savings account paid for by the scheme but which may not necessarily pay out at the rate your provider charges.

The stated self-payment gap could be quite wide — anything from R1,408 for an adult member to R18,800 (on an option with no savings account) and there are different rates for adult dependants and children on each option.

This value is amended annually by the scheme, and at times at higher rates than those applied to contributions. In 2018, while some self-payment gaps increased in line with contributions at around 9%, other were close to 12% and one option had an almost 27% increase in the self-payment gap.

Members who choose to have claims paid out of their medical savings accounts at cost rather than at scheme rates or within scheme limits for doctors, specialists, medicines and other services are likely to deplete their savings at a faster rate than claims that will accumulate towards the threshold. This will extend their self-payment gap beyond that stated in the brochure for the option.

For example, if you consult a doctor who charges R500 and you have instructed your scheme to pay your claims at cost, it will pay R500 from your savings account. If, however, the scheme’s reimbursement rate for a consultation is R350, only R350 of the R500 paid will count when the scheme considers whether you have reached the threshold or not.

In addition, if you buy R100 of over-the-counter medicines together with R450 of prescribed medicines, the scheme may pay the claims in full from your savings account but would exclude the R100 over-the-counter medicine when determining the claims that count towards threshold.

Your scheme may also exclude, for example, R150 of the prescribed medicines, because you did not use medicines on the scheme’s formulary, or list of approved medicines, or you did not get them from your scheme’s designated service provider, which is typically a particular pharmacy chain.

The effect of the amounts not accumulating towards your threshold is that your self-payment gap will be higher than the stated rand amount you see on the benefit option brochure or website.

The same rules will also apply to claims that count towards the self-payment gap. You may pay them at cost but they will only accumulate at the scheme rate.

Rules differ from scheme to scheme, but if any of these rules apply, be aware that they could affect your self-payment gap:

• Medication is paid at 100% of the scheme rate if you use generic medicines but at a lower percentage, for example 75%, if you don’t use generics;

• Sublimits apply to benefits such as optometry, specialised dentistry, psychiatry, psychology or for appliances such as wheelchairs or hearing aids. Any claims submitted over these sublimits will not accumulate towards the threshold;

• Certain claims — for example for homeopathy, naturopathy and chiropractics — are excluded altogether;

• Your scheme applies copayments for certain benefits and these can be paid from your medical savings account. Copayments will not, however, count towards threshold.

Once your qualifying claims exceed the threshold, you may find similar rules apply to above-threshold benefits. There may be limits or sublimits on benefits expressed as rand amounts or as a number of consultations, limiting the amount payable as an above-threshold benefit. Some benefits, such as those for over-the-counter medication, may be excluded altogether.

In addition, it is likely that the scheme will only pay a doctor at the scheme rate for your option and not at the rate at which the doctor charges.

Do you really need an above-threshold benefit? Many members on comprehensive medical scheme options do not access their above-threshold benefits, Larkan says. 

While many members deplete their savings accounts, far fewer members get through the self-payment gap, she says.

Crouser says that if you rarely access your above-threshold benefits, you may be overinsured and may be able to find better value on a different option. 

If one or more family members are in poor health, you may need to be on a comprehensive option, Larkan says. But many people are on the wrong option or do not understand how the benefits work.

Both she and Crouser say you should ask a broker to help you analyse your claims and to do a cost-benefit analysis for you.

Even if you have high day-to-day costs — for example, an acute medicine that is not fully covered by the scheme as a risk benefit — it may not be worth your while joining a comprehensive option, Larkan says.

For example, assume you are required to take acute medication to the value of R2,000 per month or R24,000 a year. If you belong to an option that offers you only R20,000 in medication cover,  you may be tempted to upgrade to a comprehensive plan that offers you R31,000.

A good health-care broker could advise if it is worth your while to upgrade.

If, for example, the comprehensive plan costs R5,300 a month, while the lower option costs R3,500 a month, the premium difference would be an increase of R21,600 a year.  On the lower option, the member would be required to pay his annual premium of R42,000 plus the R4,000 balance of his medication not covered by the scheme. His total annual expense would thus be R46,000. On the comprehensive plan, the member would be required to pay his full premium of R63,600, and his medication would be paid in full.

Assuming there are no other benefits that will save him out-of-pocket expenses on the higher option, it will be more cost-effective for him to pay the medicine cost himself rather than join the higher option, Larkan says.  

Remember, however, that higher-end options tend to have a number of benefit enhancements and you need to assess if they are beneficial to you.