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What is a medical aid savings account?

People’s biggest gripes around medical aid are dental benefits and savings accounts. Dental benefits will differ from one scheme to the next, and cover will be dependent on the type of plan you have. But when it comes to medical aid savings, it’s a pretty easy concept to get your head around.

Let’s look at why Medical Aid Schemes decided to introduce savings accounts into their plans.

The answer is really simple. They wanted members to start taking more control of their day-to-day spending. Your medical aid plan is broken down into two main categories:
  • Cover for your in-hospital benefits - this will be for major medical emergencies and procedures you need to be book into hospital for.
  • Cover for your out-of-hospital benefits - this will be for things like over-the-counter medication, dentist visits, GP visits etc
Medical savings accounts are designed to give you better control of the 2nd benefit, mentioned above.

So how does a medical aid savings account work?

The Medical Scheme takes a portion of your monthly contribution (The % can vary from scheme to scheme) and parks that money for you to use for all your day-to-day medical expenses.

Here is an example:

John joins Medical Scheme X in January 2015 and his monthly premium is exactly R1000. The plan that John has chosen has a 25% MSA (Medical Savings Account) allocation. That means that R250 of John’s R1000 contribution, every month, is going towards his savings account.
  • R1000 monthly contribution
  • 25% towards MSA account = R250
  • R250 x 12 months = R3000 in John’s MSA account
John has R3000 to fund all of his day-to-day medical expenses in the year. It’s his money - all that has happened is that the Medical Scheme has made the funds available to him, upfront.

John can now use those funds for any out-of-hospital expense, which he incurs. Typically MSA is used for GP visits, Dentist visits, and over-the-counter medication.

Here is an example of how MSA works:

John goes to see his GP. 20 minutes later John pays R300 for the consultation and when he gets back to the office he scans and emails his claim to his Medical Scheme. On receipt of the claim and after the Medical Scheme has confirmed that John has sufficient funds, in his MSA, to cover the bill, the scheme will refund John the R300. If we assume John still has his full R3000 MSA allocation available to him, he will now have R2700 left for the year.

Are you starting to get the gist?

It’s your money to fund whatever you need, in terms of day-to-day benefits, but just like having your own money in the bank, budgeting is key.

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