Medical aid hikes to take bigger chunk of your salary
Your contribution increase will depend on your option and the number of dependants
Medical scheme members and their employers should brace for a 10% increase in their contributions in 2020, outpacing the annual general inflation rate by 4.6%, according to Aon SA, which advises employers on employer-provided medical benefit costs.
This means your salary increase is likely to be lower than the increase in your contributions as it is more likely to be based on inflation, or lower if your employer is struggling. This means your contributions will take a bigger chunk of your salary in 2020.
Aon’s prediction is in line with the findings so far by another company that advises employers, Alexander Forbes Healthcare. It has found that so far nine open schemes have announced their contribution increases and the average increase is 9.5%.
Momentum Health medical scheme has announced a weighted average annual contribution increase of 8.2% for 2020, and Bonitas has announced a weighted average increase of 9.9% across the scheme’s various plans. (A weighted increase is an average based on the number of members paying the different percentage increases on each option.)
Remember that averages can be misleading because your own contribution increase will depend on the option you are on and how many dependants you have.
To date, Medihelp has announced the highest weighted average increase of 11.9%.
Earlier in October the country’s largest open medical scheme, Discovery Health, announced a weighted average annual contribution increase of 9.5% for 2020.
“Though the industry increases this year may appear steep during a tough economic climate that continues to put a strain on consumers’ pockets, various factors need to be considered, such as rising medical inflation rates, ageing scheme profiles and regulatory requirements,” Damian McHugh, the executive head of sales and marketing at Momentum Health, says.
A medical scheme with an ageing member base is expected to have a 2%-3% increase in claims for every year that the average age increases.Gavin Griffin, Aon’s executive head for employee benefits
Over the past few years, the average age of beneficiaries covered on medical schemes in SA has increased, resulting in increased claims costs, which in turn impacts on the contributions charged, and annual contribution increases required to manage these components, according to a media release by Momentum Health.
While Momentum Health’s weighted average increase is relatively low at 8.2%, the range of increases announced by the scheme is 7.9%-9.9%.
Many schemes say that benefit limits have “in most cases” increased and some like Momentum Health point out that they have enhanced specific benefits like their maternity benefit, for example, to provide for nurse-based support at home for new moms after the birth of their baby.
You need to pay attention to your scheme’s changes for 2020 as benefits you use may change or be subject to new conditions or limits.
The range of increases announced by Bonitas is between 6.2% (for BonFit Select members) and 11.9% (for members of the BonComprehensive, BonClassic, BonComplete, Hospital Standard and BonCap options).
Aon says that due to the ageing population of medical schemes as well as the increased incidence of chronic disease, members are using their scheme benefits more than before, which is driving up the cost of cover.
“A medical scheme with an ageing member base is expected to have a 2%-3% increase in claims for every year that the average age increases,” says Gavin Griffin, Aon’s executive head for employee benefits.
Aon’s report confirms the increasing effect of noncommunicable diseases on health-care costs globally. In SA, high blood pressure, diabetes, gynaecological-maternity, cancer, and ear, nose and throat-lung-respiratory disorders were the most prevalent health conditions driving healthcare claims.