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- Discovery Health Medical Scheme has cut the contributions allocated to members’ medical savings accounts in its saver plans.
- The saver plans are its most affordable options and account for almost half of the scheme’s members.
- Discovery says the reduction in medical savings allocations is meant to soften the impact of premium hikes.
- For more financial news, go to the News24 Business front page.
Discovery Health Medical Scheme (DHMS) has cut the total contributions allocated to members’ medical savings accounts (MSA) across its popular saver series of plans by 5%.
The medical scheme provider’s Classic Saver and Classic Delta Saver will each see the percentage of total premiums allocated to members’ MSAs cut from 25% to 20% while the Essential Saver and Essential Delta Saver will see their allocations drop from 15% to 10% in 2024. The Coastal Saver plan will have its allocations cut from 20% to 15% as of next year.
However, Discovery says the reduction in MSA allocations on its saver series of medical aid plans is intended to soften the impact of 2024 premium increases for these plans, which – as its most affordable options – cater to its most economically vulnerable clients. It also argues that it has introduced new risk benefits on these plans that offset the drop in MSA allocations.
The risk contribution is the member’s contribution towards the risk pool of the scheme, from which risk benefits are paid. These benefits are comparable to insured benefits. Deon Kotze, chief product officer at Discovery Health, said increases in the risk contributions must be in line with medical inflation, to ensure that the risk pool has sufficient funds to pay the risk benefits that are funded from that pool.
Discovery’s five saver series plans account for more than half the members of the DHMS, with the Classic Saver and Classic Delta Saver accounting for 26% of all members. DHMS had almost 1.38 million principal and 2.81 million beneficiaries as at end December 2022, accounting for 57.6% of the open medical scheme market in South Africa.
Discovery said the effective gross contribution increases in 2024 for the Classic Saver, Essential Saver and Coastal Saver plans in 2024 are 3%, 3.8% and 6.5% respectively (net of the changes in the MSA allocations for 2024) whereas their allocations to risk benefits will increase by 9.9% for the Classic Saver and Essential Saver options and 12.9% for the Coastal Saver plan.
“The reduction in the contributions towards MSA for the saver plans reduces the increase in the total contribution that members make towards the medical scheme in 2024,” said Kotze.
“For members faced with an increase in the rising cost of servicing household debt since November 2021, this would be welcome financial relief. DHMS also introduced new risk benefits for all members of the scheme, including those on the saver series. These risk benefits cover healthcare services that would typically have been funded from MSA, which offset the reduction in MSA to some extent.”
The new risk benefits introduced by DHMS for members in 2024 include funding for immediate virtual consultations with a doctor for urgent care, which is paid from risk benefits and not the MSA, as well as guided, online physical therapy, paid from risk benefits and not the MSA when part of an approved treatment plan.
Other risk benefits include funding for virtual or in-person consultations with a doctor or psychologist following the completion of a mental health risk assessment, paid from risk benefits and the MSA where the member is at risk of depression; and funding for online cognitive behavioural therapy, paid from risk benefits and not the MSA where prescribed by the GP or psychologist.
Ironically, the Council for Medical Schemes (CMS), which regulates the sector, castigated five of the 71 medical schemes it regulates on Thursday for not complying with a directive it issued in July 2023, that they not publicise contribution increases before it had approved their proposals to raise premiums. The regulator said the schemes in question – DHMS, Momentum, Medihelp, Bonitas and Bestmed – had to either withdraw recent announcements on their 2024 contribution increases or add a disclaimer that they had not yet been approved by the regulator.
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