Medical aid members downgrade their plans

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Alexander Forbes Health says 3.8% of the company’s medical aid members have downgraded their health plans as the tough economy bites. Cancellation is also a growing trend.

In 2018, 5.2% of clients made changes to their plans, and this rose to 6.7% in 2019, with only 2.9% upgrading their plans. Health expenditure inflation has outstripped CPI inflation by up to 4% but 2019 contribution increases for some schemes are above this long-term average.

“This is the first year we have seen a big shift in the number of downgrades, and the reason for this is economy, says Tracy Janssens, branch head at Alexander Forbes Health. “Even executives have started questioning their medical aid costs, and the feedback to brokers is that it is unaffordable to continue on high-cover plans that many people are not using.” 

Plans that offer good hospitalisation with small day-to-day benefits are most popular.

“Retrenchments also result in downgrades and we are seeing a lot of people completely cancelling their medical aid,” she says. “Other trends are that families put their younger, healthier members on lower plans, while blue collar workers keep sick kids covered and remove healthy ones.”

Janssens said many people are choosing income-based plans (capitation plans) that offer primary healthcare services.

“Where people work for corporates that offer more than one medical scheme, we have seen quite a few people switching between the schemes to something which has less lifestyle benefits and more healthcare benefits. People are cutting the nice-to-have loyalty and wellness programmes which have associated costs if they are not using the benefits.”

Another trend is people downgrading their medical aid plan and topping it up with gap cover. “These products are seeing growth, and three to five percent of the people who changed plans added a gap cover product,” she says.

She says brokers are essential to help members reduce costs by educating them about benefits and the appropriate use thereof. “High-risk members should be encouraged to take advantage of the screening and prevention benefits to detect any health conditions early,” she says.