When your medical savings are spent
Day-to-day expenses leave accounts looking thin this time of year
If you've run out of money in your medical savings account (MSA), you're in good company. And it may be time to rethink the amount of money you set aside for day-to-day medical expenses.
But it doesn't necessarily mean you'll have to fork out for all your day-to-day medical expenses until next year. Many schemes give some benefits to members once they've depleted the funds in their MSAs.
About 40% of members of Discovery who have MSAs have negative balances at this time of year. Dr Ryan Noach, the deputy CEO of
Discovery Health, which administers SA's largest medical scheme, says this is consistent across all options that come with an MSA - namely the Executive, Comprehensive, Comprehensive Delta, Priority, Saver and Saver Delta options.
Victor Crouser, the head of health (coastal) at Alexander Forbes, says it's common for members to run out of funds in their MSAs during the course of the year.
Whether or not you use an MSA to fund your day-to-day benefits should be a factor you consider when choosing a medical-scheme option, says Crouser.
"Most people don't have the self-discipline to save for health-care expenses such as doctor visits, medicines, glasses, dentistry, et cetera. A savings account effectively forces you to set aside some money," he says.
of numbers of SA's largest scheme, Discovery Health, have no savings left at this time of year
You should consider your previous out-of-hospital expenses when you work out whether the amount you will set aside in an MSA - which is included in your monthly contribution to the scheme - is sufficient, he says.
Take a look at what you spent on day-to-day medical expenses over the past three years and get an average annual figure, then compare it to what you contribute to your MSA.
"You could consider buying up to a higher option that might have more savings, or even a plan with an above-threshold benefit, but you have to consider whether it is worth it," he says. If you're on a more comprehensive option with an above-threshold benefit, when you exhaust your savings you enter what is known as a self-payment gap, where you pay some claims up to a limit.
After that, your claims are again paid by the scheme as what are known as above-threshold benefits.
"In many cases, it's not worth it to move to a higher option as what you might pay for a higher plan, and a possible self-payment gap, is quite high. A knowledgeable health-care adviser or broker should be able to guide you on this," he says.
As an example, take a member who is a paying a contribution of about R3,000 a month, R600 of which is going into an MSA, making the annual amount available for day-to-day health-care expenses around R7,000.
This used to be more than enough, until the member added one child dependant, whose savings-account contributions were low but whose winter flu and chest infections were numerous. This, together with the usual day-to-day expenses, resulted in the member exhausting her MSA by mid-year.
The member could upgrade to a comprehensive option to get far more medical savings (about R9,000 for the year), but this would cost her just short of an extra R2,000 a month.
It doesn't make sense for her to spend R23,000 a year to get an extra R2,000 a year in her MSA. As she would then be on an option with above-threshold benefits, it could be argued that she could potentially get an additional R19,990 of benefits, but she would only access this benefit after she had spent R11,134 in the self-payment gap.
If this mom was a disciplined saver and instead set aside an additional R300 a month in a dedicated savings account for medical expenses, it would give her another R3,600 a year to use for day-to-day expenses.
Jill Larkan, the head of health-care consulting at GTC, says if you are disciplined enough to contribute to your own dedicated medical costs fund, you can save the roughly 10% administration cost that schemes typically levy on these accounts.
When moving to a more comprehensive option, you may be moving to one with sicker people and therefore higher contribution rates, and you may not get value for your money. You may also gain some benefits that you may or may not utilise.
Before you choose an option with a savings account, check how much of your contribution goes to fund the MSA.
You may prefer one that contributes more, or less, depending on what your day-to-day medical expenses tend to be.
If it is an option with a self-payment gap, check what that gap is. Members of Discovery's popular Classic Comprehensive option, for example, have a self-payment gap of R2,150 for the principal member, R2,942 per adult dependant and R284 per child dependant.
Consider that your self-payment gap may seem bigger than the amount you see quoted in your medical scheme brochure. This is because claims paid from your MSA may not count in full when your scheme tallies what counts towards the threshold at which above-threshold benefits apply.
To preserve your MSA, Larkan suggests paying doctors who offer a discount for quick settlement and then claiming from your scheme, to benefit from the discount. She also cautions against using all your savings account monies on nonessential items such as expensive spectacle frames.
Benefits that help out when your savings account is depleted
• If you've depleted the funds in your medical savings account you may be entitled to certain extra benefits payable by your scheme.
• Consultations and treatment for all prescribed minimum-benefit (PMB) conditions must be covered even after your savings are depleted.
• The PMBs cover close to 300 conditions, such as meningitis, various cancers, menopausal management, cardiac treatment, mental illnesses such as anorexia and bulimia, and many others, including all medical emergencies and 25 common chronic illnesses.
• Make sure the tests and consultations have the right code - some may have to be coded after a diagnosis. Often, tests have what is known as a Z-code because the diagnosis is unknown, and your scheme may not pick up that that test is related to a PMB.
• Beyond this, schemes offer some essential benefits to members who have depleted their savings.
• Discovery Health members on the Saver options, for example, get a set number of general practitioner consultations with doctors in the scheme's network of GPs. Members on the Comprehensive, Executive and Priority options get unlimited consultations with such GPs. On some Discovery options, there is cover for two casualty visits for children under 10.
• Bonitas provides members who have spent all their savings with childcare benefits for children under 12, such as two GP consultations and up to three paediatric consultations.
• Jill Larkan, head of health-care consulting at GTC, says some schemes pay certain benefits directly from your risk benefit for the benefit of members who have exhausted their savings and those who don't have savings accounts.
• Fedhealth, for example, pays for unlimited GP and dentist consultations on all but four of its hospital-only plans, she says. It also gives all its members trauma-room cover for PMB and non-PMB events.
• Momentum Health members, excluding those on the Ingwe and Impact options, can get extra benefits by participating in the HealthReturns programme. You get points for doing health tests and exercising, and these are converted to a cash benefit.
• Many schemes also offer screening benefits for tests such as pap smears.