When it comes to provision health insurance, certain terms leave the contributors confused.
South Africa is largely uninsured, with less than 20% of the population having no medical aid cover.
Most of this is due to lack of information on the importance, and a general lack of understanding of why medical aid schemes exist in the first place.
As more and more South Africans take up medical cover, it is vital that proper information is disseminated to them. One of the buzzwords they will hear over and over is co-payment, or simply copay.
What is insurance co-payment?
In simplest terms, a co-payment in health insurance is an out-of-pocket expense levied on medical aid scheme members.
It is basically a cost sharing mechanism introduced by these schemes to keep them afloat and profitable.
Every scheme is different, and will require co-payments on different particulars. For instance, some may require you split the cost of an MRI, CT Scan, hospital admission, specialists consultations, etc.
So, despite having health insurance, you end up paying out-of-pocket for particular treatments or procedures, as determined by your medical aid scheme.
Co-payments also apply when a scheme member voluntarily opts to visit a hospital or specialist that has not been selected by the scheme as a ‘dedicated service provider’, meaning facilities and professionals that have not been handpicked. They are referred to as ‘out of network’ service providers.
Co-payments mostly apply to members of low to mid-cost medical aid plans. Some higher plans may have a copay cover, meaning contributors are not required to personally pay anything.
If you belong to the former group, your co-payment is usually required upfront and in full.
Is copayment the same as coinsurance?
South Africans have a way of using one word to mean another. In this country, copayments are generally interpreted to mean your share of the hospital bill after the medical aid scheme covers its part.
However in real sense, copay and coinsurance have separate meanings.
Copay: This is a fixed fee levied on you for specific medical services. It can be a different rate depending on procedure. For instance, you could have a copay of R150 for a dentist visit, and a copay of R300 for an MRI scan.
Coinsurance: This is a percentage based system of cost sharing. For most insurance providers, this percentage should be less than 20%, meaning you will cover that percentage of your bill.
Is copayment the same as deductible?
Another term that confuses South Africans is deductible. Often, you’ll find it and copayment used interchangeably.
However, a deductible is actually an annual amount a scheme member has to pay out-of-pocket for their medical needs, before medical aid can kick in.
This is standard across all types of insurance, including in car insurance where it goes by the name ‘excess’.
So for instance, if you have a deductible of R10,000, and your hospital bill comes to R100,000, you will be required to pay the first R10,000 before your scheme can add the remaining R90,000.
This does not happen to every bill, but only once annually, or until the deductible is met. Meaning if your deductible is R10,000 but the bill is R7,000, you will still need to pay an additional R3,000 on your next bill.
Always read the fine print, because the deductible can be different for you – the contributing member, and for your dependents, with the latter having a higher one.
Some schemes may offer you a chance to take up ‘deductible protection’. This is where you pay an annual fee (less than the deductible), so that in the event you make a claim, the deductible will not apply to you.
It’s the same in auto insurance where you can take up ‘excess protection’, where in the event of an accident, the insurer will pick up the full tab.
Please note that deductibles supersede copayments and coinsurance. This means that you will have to meet your deductibles first, before your copayment or coinsurance is calculated.
And yes, all this can happen in single hospital bill.
Are Co-payments legal in South Africa?
The best way to put it is that they are not illegal.
However, regulators in South Africa have determined that the medical aid schemes have regularly abused them, and are now planning to issue stricter guidelines.
In May 2021, the Council for Medical Schemes (CMS) announced plans to introduce regulations to curb the practice. They cited the schemes’ unilateral power for instance in determining and handpicking the ‘dedicated service providers’.
This, they said, has a limiting effect when it comes to options available to members, who end up spending out-of-pocket for services in places convenient to them.
When more service providers are brought on board, the co-payments on ‘out of network’ service will drastically go down.