Health Insurance Explained Without the Jargon

By the end of this guide, you should understand:

• What health insurance is.
• What a premium is.
• Who the policyholder and insured persons are.
• What an insured event is.
• How health insurance benefits may be provided.
• Why the benefit provided by the policy may differ from the healthcare account.
• Why policy wording is important.
• How waiting periods, exclusions and benefit limits may affect cover.
• Who regulates insurance in South Africa.
• What you need to investigate before choosing health insurance.

Health insurance is an insurance arrangement that provides particular benefits when the requirements of the policy are met.

The person taking out the policy generally pays a premium.

In return, the insurer agrees to provide the benefits described in the policy when the requirements for those benefits are met.

Depending on the type of health insurance, benefits may relate to healthcare such as:

• doctor consultations;
• medicine;
• certain medical tests;
• accidents;
• qualifying hospital events; or
• other healthcare services covered by the policy.

Not every health insurance policy provides all of these benefits.

What a particular policy provides depends on the type of policy and its terms and conditions.

As explained in MG003 – Medical Aid Explained Without the Jargon, medical aid is membership of a registered medical scheme.

Health insurance is an insurance policy.

They are different healthcare funding arrangements and operate under different legal frameworks.

We will compare the differences directly in MG005 – Medical Aid vs Health Insurance: Understanding the Difference.

For now, the important thing to remember is:

Health insurance and medical aid should not be treated as two different names for the same thing.

The amount paid for health insurance is generally called a premium.

The premium is paid in return for the insurance cover provided under the policy.

Paying a premium does not mean that every healthcare cost will automatically be paid.

The benefits available depend on the particular policy.

The policyholder is the person who enters into the insurance contract.

The insured person is the person whose qualifying healthcare need or event may give rise to a benefit under the policy.

The policyholder and insured person may be the same person, but this is not always the case.

Depending on the policy, more than one person may be insured.

A spouse, child or other family member should not automatically be assumed to be covered. The person must meet the policy requirements and be properly included where required.

An insurance policy sets out the circumstances in which a benefit becomes available or payable.

These circumstances may include an insured event.

Depending on the policy, this could involve a qualifying accident, hospital admission, illness or another event defined in the policy.

The exact definition matters.

Two policies may appear to offer similar benefits but have different requirements for when those benefits become available.

This is one reason why it is important to understand the policy rather than relying only on the product name.

Health insurance benefits are not necessarily provided in the same way.

Depending on the policy and the particular benefit, the insurer may provide:

• a stated payment;
• reimbursement of an eligible expense;
• payment to a healthcare provider;
• access to a particular healthcare service; or
• another benefit described in the policy.

So the important question is not only:

“Am I covered?”

It is also:

“What benefit does the policy provide, and how will I receive that benefit?”

A healthcare provider charges you for the healthcare services you receive.

Your health insurance policy sets out the benefit the insurer has agreed to provide when the policy requirements are met.

The amount charged by the healthcare provider and the amount paid or provided by the insurer may not be the same.

For example, the healthcare account could be higher than the benefit available under the insurance policy.

If the policy does not cover the full healthcare cost, you may be responsible for paying the remaining amount yourself or may need another funding arrangement.

Some health insurance policies may include waiting periods.

A waiting period is a period after cover begins during which particular claims or benefits may be restricted.

Waiting periods do not necessarily work in exactly the same way for every type of health insurance.

The applicable rules depend on the type of policy, the law and the policy terms.

Before taking out health insurance, check whether waiting periods apply and which benefits they affect.

We will explore waiting periods in more detail in a separate Curalern guide.

An exclusion identifies something that is not covered by the policy.

A benefit limit places a limit on a particular benefit. The limit might relate to the amount available, how often a service can be used or another restriction described in the policy.

Both can have an important effect on what the policy will provide.

Before choosing health insurance, investigate:

• What is covered?
• What is excluded?
• Are there waiting periods?
• What are the benefit limits?
• Are there provider networks?
• Is authorisation required?
• Are there limits on how often a particular benefit may be used?

These questions give you a clearer picture of the cover than looking at the monthly premium alone.

Some health insurance policies may use healthcare provider networks or require authorisation for certain benefits.

A network may determine which healthcare providers can be used for a particular benefit.

Authorisation may be required before certain healthcare services are accessed.

The exact requirements and the consequences of not following them depend on the particular policy.

This is another reason why understanding the policy terms is important.

The words hospital cover or hospital plan can mean different things.

A medical scheme may offer a hospital-focused benefit option, while an insurance policy may provide a hospital-related benefit.

These are not automatically the same.

Rather than relying on the product name, establish what type of product it is and what benefit it actually provides.

We will explain this properly in MG006 – What Does “Hospital Plan” Really Mean?

Health insurance falls within South Africa’s insurance regulatory framework.

The Financial Sector Conduct Authority (FSCA) plays an important role in supervising the conduct of financial institutions within its mandate.

Insurance providers and policies must operate within the applicable legal and regulatory framework.

If you have a complaint, the insurer’s internal complaints process will generally be an important first step. Depending on the type of complaint and product involved, an external complaints process may also be available.

We will explain complaints and escalation routes separately rather than covering the full process here.

Before choosing health insurance, look beyond the product name and monthly premium.

Investigate:

• Who is the insurer?
• What type of policy is it?
• Who will be insured?
• What benefits are included?
• What must happen before each benefit becomes available?
• How is the benefit provided or paid?
• What are the benefit limits?
• What is excluded?
• Are there waiting periods?
• Are provider networks used?
• Is authorisation required?
• What healthcare costs might you still have to pay yourself?
• How do you submit a claim?

Most importantly, make sure you understand the policy wording and the information relating to your particular cover.

These documents explain what the insurer has actually agreed to provide.

The most important ideas are:

• Health insurance is an insurance arrangement.
• You generally pay a premium for the cover provided under the policy.
• The policy determines what benefits are available and when they can be used.
• Health insurance and medical aid are different healthcare funding arrangements.
• The product name alone does not tell you what is covered.
• The amount charged by a doctor, hospital or other healthcare provider may be different from the benefit your insurance policy provides.
• Waiting periods, exclusions, networks, authorisation requirements and benefit limits may affect your cover.
• Family members should not automatically be assumed to be insured.
• Understanding the policy is important before relying on the cover.

You now understand the basic structure of health insurance and how its benefits work.

We have separately looked at medical aid in MG003 and health insurance in MG004.

The next guide brings the two together:

MG005 – Medical Aid vs Health Insurance: Understanding the Difference

There we will compare the two healthcare funding arrangements directly, without repeating everything we have already covered.

We’ll take it one step at a time.