05 August 2008

Don't cancel your medical scheme

People who are experiencing financial difficulties should think very carefully before cancelling their medical scheme contributions.

People who are experiencing financial difficulties should think very carefully before cancelling their medical scheme contributions.

According to analysts, the current high interest rates and the possibility of a further interest rate hike in August inevitably mean that consumers have to review their financial affairs and cut down on unnecessary expenses in order to cover basic expenses.

After a home loan, a medical scheme contribution is a household's biggest expenditure. In most cases expenses such as school fees, car and annuity payments are fixed and cannot really be changed.

So the first payment people want to cancel is their medical scheme contribution because it is so high, sometimes seems unnecessary and is also regarded by most people as a "grudge expense".

Medical cover important
Experts, on the other hand, warn that medical cover remains important, as health is unpredictable and accidents do happen.

The associated costs could be far higher than your existing medical scheme contribution and could result in an even heavier financial burden.

The question among many consumers is how they can reduce their medical scheme contributions in order to stay within their budget.

Cancellation is not necessarily the answer, but members of medical schemes could change their contributions by trying to find a more affordable product.

Cheaper options available
According to Mr Marcel du Toit, chief executive of Medquote, this is why it is important to find out more about benefit structures and options available in the market.

“You could always change to a cheaper option instead of summarily cancelling your contribution. Shop around for affordable yet comprehensive cover that best suits your needs and, more importantly, your pocket.

“If you are considering changing to another scheme, it is vital to get accurate information on it from experts.

“If you currently have a comprehensive plan, your family is relatively healthy and your day-to-day expenses are not very high, changing to a hospital plan until economic conditions have improved might be a good option,” he says.

However, consumers must bear in mind that changing to a new scheme could involve a waiting period of three months, which would mean that they would not be covered during that time.

Some medical schemes, such as Discovery, do allow members to downgrade to another option.

Ms Mitzi Ginsburg of the Financial Planning Institute's health planning division says medical scheme members should ascertain whether their medical scheme does offer an option to downgrade.

“If it doesn't, it is advisable to consult a financial adviser on how you can pay your medical scheme contribution until the end of the year and then change to a cheaper option from January.”

She advises consumers to try to maintain medical cover in spite of pressure on household spending, as timely assistance in state hospitals is not always available.

(Letitia Watson, Sake Rapport, 3 August 2008)



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