• Health insurance may cover doctors, dentists and medicine, but consumers could have much less protection for hospital stays and long term medical conditions.

• Younger and healthier people may save money by leaving medical aid, but a major accident could leave them facing medical bills worth millions of rand.

Cheaper health cover may look like a lifeline for South Africans struggling with rising medical aid costs.

But that saving could come with a painful surprise when someone becomes seriously ill or lands in hospital.

Damian McHugh of Momentum Health has warned consumers that health insurance and medical aid are not the same thing.

He said the growing popularity of health insurance is partly being driven by people struggling to afford medical scheme contributions.

Health insurance can cost less and may offer benefits that look similar to medical aid.

That is where confusion can begin.

“A lot of us think that we are then buying something very similar to medical aid, and it may provide some elements of cover that are the same, but it doesn’t provide quite a significant amount of cover, so you think you have something that you don’t have,” McHugh said.

Health insurance comes in different forms.

Some products can help pay for everyday healthcare needs, including visits to doctors and dentists and some medicine.

Those benefits can sometimes look similar to what a medical scheme offers.

But the gap can become much bigger when a person develops a serious illness, needs treatment for a long term condition or has to go to hospital.

“The stuff that it often doesn’t cover is sometimes chronic medicine at the same level as what a medical scheme provides, and your hospitalisation cover is way, way lower,” McHugh said.

There is also an important difference in what the two products are legally required to cover.

Medical schemes must pay for prescribed minimum benefits.

McHugh said there are more than 270 prescribed minimum benefits.

Health insurance does not have the same legal requirement.

“There are over 270 prescribed minimum benefits. Health insurance doesn’t have to cover those,” he said.

This means someone thinking about cancelling medical aid and moving to cheaper health insurance needs to check exactly what they will lose.

“Not all of your benefits will be covered,” McHugh warned.

But the rise of health insurance does not mean everyone buying it is abandoning medical aid.

McHugh said most people buying health insurance have never had healthcare cover before.

“But the vast majority of the people that are buying health insurance have never been on cover before,” he said.

He believes that is positive because more people are gaining some access to private healthcare cover.

The bigger concern is what happens when people who already belong to medical schemes decide they are paying for more cover than they need.

This can be especially tempting for younger and healthier people.

Someone who rarely visits a doctor may look at a monthly medical aid payment and wonder why they are spending so much money.

But medical schemes depend on healthier and sicker members being part of the same pool.

Healthier members may use fewer medical services while people who are ill need much more expensive treatment.

The money paid into the scheme helps spread that risk across members.

If younger and healthier members leave, that balance can come under pressure.

There is also a personal financial risk for someone who gives up wider medical cover because they feel healthy today.

A serious medical emergency can happen without warning.

“You’d never have enough money in your own accounts if you have a big emergency,” McHugh said.

He used the example of a serious accident while travelling, where medical costs could run into millions of rand.

That is the danger consumers need to weigh against the immediate saving of cheaper cover.

McHugh said younger people should think about medical emergencies they cannot predict or control.

At the very least, he said, they should consider keeping medical scheme protection against major unexpected medical costs.

That may cost more every month than cheaper health insurance.

But McHugh said keeping younger and healthier people in medical schemes also helps make the system sustainable.

As those members grow older, they may eventually need younger and healthier members to help carry the cost in the same way.

“There is going to come a day when the younger people are cross-subsidising you as well, so it keeps the market sustainable,” he said.

For consumers squeezed by monthly bills, cheaper health insurance may still be attractive.

But McHugh’s warning is simple: know exactly what you are buying before giving up medical aid.

The cheaper option could cover some everyday healthcare costs while leaving a much bigger hole when a serious medical emergency hits.

Pictured above: Consumers are being warned to understand the differences between medical aid and cheaper health insurance before changing their cover.

Image source: File.