Choosing a cash-back hospital plan

Published on 19 January 2012

by Staff Writer

Considering a cash-back hospital plan? With over 100 medical aid schemes operating in South Africa, which one do you choose? Instant Life Insurance highlights some of the key factors to consider when choosing cash-back hospital plans.

As the name suggests, a hospital plan covers you for the medical and treatment costs incurred as a result of overnight hospitalisation. Covered procedures typically include emergency surgery, the treatment of serious illnesses and certain pre-authorised medical procedures.

Given their relative affordability, combined with young people being healthier, on average, hospital plans are frequently chosen by the under-thirties.

Most hospital plans will provide cover between 100% and 200% of Medical Scheme Tarrifs (MST) rates (see National Health Reference Price List or NHRPL). The problem is that medical specialists such as anaesthetists, radiologists and surgeons can legally charge up to 400% of MST rates, which could leave you tens of thousands of rands out of pocket as the result of an extended period of hospitalisation due to illness or injury.

While hospital plans may offer more compelling benefits than medical insurance policies (typically feature capped lump sum benefits), you need to consider your options carefully when choosing any kind of medical aid.

Be sure to consider the following aspects before signing up for any cash-back hospital plan:

• Establishedness and credibility – Is the medical aid scheme an established provider or new to the market?


• The level of hospital cover you need – Everyone has different needs when it comes to medical aid. Are you young and single, or married and planning to start a family? Are you worried about cholestrol, heart disease or cancer based on your family history? Get cover that will be sufficient now and for the foreseeable future, and reassess your needs regularly.


• Cash-back vs. premiums – Are the cash-backs substantial, or are the merely loaded onto your premium? Shop around for a few medical aid quotes - and remember to compare apples with apples.

• Waiting periods – Are you pregnant? Do you have some pre-existing medical conditions? Different hospital plan providers may impose waiting periods on certain benefits for pre-existing conditions.

• Cash-back Conditions – Will you realistically get a cash payment back, or will you never see a payout. If claiming for chronic conditions’ treatment may jeopardise your no claims bonus, the policy may not be suitable for someone with serious chronic conditions. Ensure you can actually benefit from the cash-back component medical aid plan in question.

• Exclusions and payout limitations – Don’t just listen to a call centre agent, read the fine print. Always.

• The claims experience – Speak to someone you trust about their experience with the hospital cash back plan you are considering. Was the service, fast and efficient?  How long did it take for their claim to get processed? Were they able to benefit from the cash back plan?

• Claims processing speed – When you have a medical emergency, the speed of claims processing can be critical. Does the hospital plan provider you’re considering guarantee their turnaround time on claims?

Considering the above points can help you make a more informed decision about cash back hospital plans. Speaking to an authorised financial services advisor can also help answer your questions.

Read more South African life insurance news articles here.