Master Guide
Medical Aid vs Health Insurance: Understanding the Difference
Medical Aid or Health Insurance?
Reading time: 5–8 minutes
The words medical aid, health insurance and health cover are often used when people talk about paying for healthcare.
This can make them sound more similar than they really are.
Both medical schemes and health insurance can help people manage healthcare costs, but they are not two names for the same thing.
They operate differently, fall under different legal frameworks and may provide very different benefits.
Understanding those differences is important before comparing products or prices.
What You Will Understand
By the end of this guide, you should understand:
- The main differences between medical aid and health insurance.
- How their legal structures differ.
- The difference between contributions and premiums.
- How benefits are determined.
- How Prescribed Minimum Benefits (PMBs) differ.
- What a healthcare provider network is.
- Why both arrangements can still leave you with out-of-pocket healthcare costs.
- Whether you can have medical aid and health insurance at the same time.
The Fundamental Difference
As we explained in MG003 and MG004:
- Medical aid is membership of a registered medical scheme.
- Health insurance is an insurance policy.
That fundamental difference affects how each arrangement operates, what rules apply and how healthcare benefits are provided.
Medical Aid and Health Insurance Side by Side
Medical Aid and Health Insurance Side by Side
| Question | Medical Scheme (Medical Aid) | Health Insurance |
|---|---|---|
| What is it? | Membership of a registered medical scheme. | An insurance policy. |
| What do you pay? | A contribution. | A premium. |
| Who can receive benefits? | The member and eligible registered dependants. | The insured person or persons covered under the policy. |
| What determines the benefits? | Medical-scheme law, the scheme's registered rules and the selected benefit option. | Applicable insurance law and the terms and conditions of the policy. |
| Do PMBs apply? | Yes. Every medical-scheme benefit option must provide the PMBs required by law. | No. The PMB requirements that apply to registered medical schemes do not apply to health insurance policies. The insurer provides the benefits set out in the policy, subject to applicable insurance law. |
| Can a healthcare provider network apply? | Yes. Depending on the benefit option, you may be required or encouraged to use particular doctors, hospitals, pharmacies or other healthcare providers. | Yes. Depending on the policy, particular benefits may be provided through specified doctors, hospitals, pharmacies or other healthcare providers. |
| Can waiting periods apply? | Yes, where permitted by medical-scheme law. Previous medical-scheme membership and other circumstances can affect the waiting periods that may be imposed. | Yes. Waiting periods may apply depending on the type of policy, applicable law and policy terms. |
| Can benefit limits apply? | Yes, subject to applicable medical-scheme law and PMB requirements. | Yes. Benefits may be subject to the limits and conditions set out in the policy. |
| Can authorisation be required? | Yes. Certain healthcare services or treatments may require authorisation. | Yes. Depending on the policy, certain benefits or services may require authorisation. |
| Could you still have to pay some healthcare costs yourself? | Yes. Depending on the circumstances, you may have co-payments, amounts above the scheme's applicable rate or other costs that are not funded, subject to applicable PMB rules. | Yes. The insurance benefit may not cover the full amount charged for the healthcare you receive. |
| What should you read carefully? | The benefit information and applicable registered scheme rules. | The policy wording and information relating to your particular cover. |
| Who regulates it? | Medical schemes are regulated by the Council for Medical Schemes (CMS) under the medical-scheme regulatory framework. | Health insurance falls within South Africa's insurance regulatory framework, with the Financial Sector Conduct Authority (FSCA) playing an important conduct-regulation role. |
- Question
- What is it?
- Medical Scheme (Medical Aid)
- Membership of a registered medical scheme.
- Health Insurance
- An insurance policy.
- Question
- What do you pay?
- Medical Scheme (Medical Aid)
- A contribution.
- Health Insurance
- A premium.
- Question
- Who can receive benefits?
- Medical Scheme (Medical Aid)
- The member and eligible registered dependants.
- Health Insurance
- The insured person or persons covered under the policy.
- Question
- What determines the benefits?
- Medical Scheme (Medical Aid)
- Medical-scheme law, the scheme's registered rules and the selected benefit option.
- Health Insurance
- Applicable insurance law and the terms and conditions of the policy.
- Question
- Do PMBs apply?
- Medical Scheme (Medical Aid)
- Yes. Every medical-scheme benefit option must provide the PMBs required by law.
- Health Insurance
- No. The PMB requirements that apply to registered medical schemes do not apply to health insurance policies. The insurer provides the benefits set out in the policy, subject to applicable insurance law.
- Question
- Can a healthcare provider network apply?
- Medical Scheme (Medical Aid)
- Yes. Depending on the benefit option, you may be required or encouraged to use particular doctors, hospitals, pharmacies or other healthcare providers.
- Health Insurance
- Yes. Depending on the policy, particular benefits may be provided through specified doctors, hospitals, pharmacies or other healthcare providers.
- Question
- Can waiting periods apply?
- Medical Scheme (Medical Aid)
- Yes, where permitted by medical-scheme law. Previous medical-scheme membership and other circumstances can affect the waiting periods that may be imposed.
- Health Insurance
- Yes. Waiting periods may apply depending on the type of policy, applicable law and policy terms.
- Question
- Can benefit limits apply?
- Medical Scheme (Medical Aid)
- Yes, subject to applicable medical-scheme law and PMB requirements.
- Health Insurance
- Yes. Benefits may be subject to the limits and conditions set out in the policy.
- Question
- Can authorisation be required?
- Medical Scheme (Medical Aid)
- Yes. Certain healthcare services or treatments may require authorisation.
- Health Insurance
- Yes. Depending on the policy, certain benefits or services may require authorisation.
- Question
- Could you still have to pay some healthcare costs yourself?
- Medical Scheme (Medical Aid)
- Yes. Depending on the circumstances, you may have co-payments, amounts above the scheme's applicable rate or other costs that are not funded, subject to applicable PMB rules.
- Health Insurance
- Yes. The insurance benefit may not cover the full amount charged for the healthcare you receive.
- Question
- What should you read carefully?
- Medical Scheme (Medical Aid)
- The benefit information and applicable registered scheme rules.
- Health Insurance
- The policy wording and information relating to your particular cover.
- Question
- Who regulates it?
- Medical Scheme (Medical Aid)
- Medical schemes are regulated by the Council for Medical Schemes (CMS) under the medical-scheme regulatory framework.
- Health Insurance
- Health insurance falls within South Africa's insurance regulatory framework, with the Financial Sector Conduct Authority (FSCA) playing an important conduct-regulation role.
What Is a Healthcare Provider Network?
Because network is a term you may come across with both medical aid and health insurance, it is useful to understand what it means.
A healthcare provider network is a group of healthcare providers or facilities that have arrangements relating to a particular medical-scheme option or insurance benefit.
Depending on the arrangement, the network may include:
- doctors;
- specialists;
- hospitals;
- pharmacies;
- clinics; or
- other healthcare providers.
Using a provider outside the applicable network may affect the benefit you receive or the amount you have to pay yourself.
The exact consequences depend on the medical-scheme rules or insurance policy involved.
Why PMBs Are an Important Difference
Prescribed Minimum Benefits (PMBs) are one of the important legal differences between medical schemes and health insurance.
As explained in MG003, every registered medical-scheme benefit option must provide the PMBs required by law.
Health insurance policies are not medical schemes and are not subject to the medical-scheme PMB requirements.
Instead, an insurer provides the benefits set out in the insurance policy, subject to the applicable insurance framework.
This is why two healthcare funding products should not be considered equivalent simply because they appear to provide similar healthcare services.
Can You Have Both?
Yes. A person can belong to a medical scheme and also have certain separate health-related insurance products, provided the arrangements comply with the applicable law.
One example is gap cover.
Gap cover is insurance designed to provide benefits for certain defined shortfalls associated with eligible medical-scheme claims.
It does not replace medical aid and should not be assumed to pay every amount that a medical scheme does not pay.
The medical scheme and the gap-cover insurer each apply their own rules.
Curalern will explain gap cover separately in a dedicated guide.
Which One Is Better?
There is no single answer that applies to everyone.
Medical aid and health insurance are different healthcare funding arrangements with different legal structures and benefits.
The more useful question is:
Which type of healthcare funding am I looking at, what does it provide, and what could I still have to pay myself?
Price matters, but it should not be considered on its own.
A lower monthly payment does not necessarily mean that two products provide equivalent healthcare benefits or financial protection.
Be Careful With Product Names
Words such as:
- health cover;
- hospital cover;
- hospital plan;
- family health cover; and
- medical cover
do not necessarily tell you what type of healthcare funding arrangement you are looking at.
For example, the words hospital plan might be used when referring to a hospital-focused medical-scheme benefit option or to an insurance product providing hospital-related benefits.
These are not the same thing.
Before comparing products, establish whether you are looking at a medical-scheme benefit option or an insurance policy, and then investigate the benefits and rules that apply.
What to Remember
The most important ideas are:
- Medical aid and health insurance are different healthcare funding arrangements.
- Medical aid is membership of a registered medical scheme.
- Health insurance is an insurance policy.
- Medical-scheme members pay contributions, while insurance policyholders pay premiums.
- Medical-scheme benefits are determined by medical-scheme law, registered scheme rules and the selected benefit option.
- Health-insurance benefits are determined by the applicable insurance framework and the policy.
- PMB requirements apply to registered medical schemes, not health insurance policies.
- Both medical schemes and health insurance may use healthcare provider networks.
- Waiting periods and benefit limits may apply, but the rules differ.
- Both arrangements may leave some healthcare costs for you to pay yourself.
- A person can have medical aid and certain separate health-related insurance products at the same time.
- The product name and monthly cost alone are not enough to make a meaningful comparison.
Continue Your Learning Journey
You now understand the main differences between medical aid and health insurance.
The next guide looks at a term that can be particularly confusing:
MG006 – What Does “Hospital Plan” Really Mean?
We will look at why the words hospital plan can refer to different healthcare funding arrangements and what you need to understand when you come across this term.
We’ll take it one step at a time.
From the Curalern Knowledge Centre
Knowledge builds confidence. Confidence leads to better decisions.