*** 25% of South Africans can no longer afford medical aid – don’t become a statistic…!

*** Protecting your health and saving money can go hand-in-hand – discover how...

*** Save up to R1,320 by going generic... and more…

From the pen of Karin Iten

Dear Investment Academy Reader,

Forget luxuries – The economic slowdown is hitting us so hard that many of us have to cut back on bare necessities. In fact, according to research, more than a quarter of the country can no longer afford medical aid. And out of those that still can, 44% haven’t even looked for cheaper coverage. Quite frankly, this means they’re more likely to renege on payments and get kicked out of their fund than catch up.

Analysts predict that medical aid contributors can expect to pay between 10% and 15% more in contributions this year. That’s going to be a bitter pill for us to swallow. But sacrificing your health coverage isn’t an option. In fact, according to an article in last week's Business Report, South African's are so fearful of our public health system, that around 200,000 people joined a medical aid plan in the past 12 months.

Just as scary is the fact that few people ever explore the numerous ways you can reduce costs. That’s why, this week, I’ll introduce you to a few of them before these new tariffs come into play…

#1: Review your position

Most of us are guilty of not doing this. According to statistics, 85% of all contributors only check their medical aid policies once every eight years. This could be harmful to your pocket. As you age, your circumstances change and so do your healthcare needs. But ageing doesn’t have to be a burden. Many medical aids have special policies for family structures and for the older generation. So, get out your scheme and ask an independent medical aid broker to give it the once over. Who knows? You may have the option to reduce your payments without cutting down on the type of coverage you receive.

#2: Stick together

Are you, your spouse and your dependants on the same medical scheme? This is an important question and it’s one few of us consider if you or your spouse receive company medical benefits. But, if you’re both on different schemes this could be costing you around R9,600 extra a year. Why? Well, simply because both of you are the primary beneficiary of each policy.

So, consider switching to your partner’s scheme as an adult dependant. Similarly, if you’re a family of more than three, consider switching to a medical aid where you only pay for your first child and the rest of your children are covered free of charge.

And while we’re on the subject of "children", South African’s are celebrated pet lovers and medical aids know this. But, the cost of placing your pet on insurance is often ridiculous. So avoid pet healthcare. Instead, place some money aside each month to protect your four-legged “baby” in the event of an emergency. 

#3: Consider using your premiums as a savings plan

How many times have you been ill in the last 12 months? If you can count the number of times on one hand, and don’t take any chronic medicine, then not only can you count yourself lucky but you’re probably wasting money on medical contributions that you’ll never use. But don’t reach for the phone to cancel your scheme just yet – instead, consider this… major medical aids (like Discovery Health) have started medical savings plans. These are a great way to get back some of your premiums without losing out on medical benefits. Oh and did I mention that the unused portion actually earns interest that belongs to you?

Here’s how they work: Schemes with medical savings accounts, typically offer cover for major medical expenses, such as hospitalisation, but the policy will place up to 25% of your contribution in the savings account and you can use this to fund your day-to-day medical expenses.

This gives you the power to decide how to spend your annual benefits. And, in the event that you change medical schemes or cancel your policy, a substantial portion of your capital is paid back to you.

#4: Go generic

Generic medicine costs a fraction of the price of the “name” brand and can often be issued over-the-counter, so there’s no need to run to the doctor for a prescription.

Prozac, for example, goes for around R325 for 30 x 20mg tablets, whereas the generic, Lilly Fluoxetine (made by the very same company) costs around R105 for 28 x 20mg tablets. That’s a saving of R1,320 on a six month prescription!

And don’t forget to think generic when you’re buying over-the-counter meds too. Paracetemol is paracetemol! So ask your pharmacist for an unbranded box. You can get around 100 tablets for R20, as opposed to R10 for 24!

But remember, check with your doctor before switching to generics.

#5: Make sure you understand the rates

Check that your GP, dentist, optometrist or other healthcare professional charge you medical aid rates. This one thing could save you lots of money – in fact, if your health practitioner charges you higher fees, you could end up footing 70% of the bill. 

That’s all from me this week. Keep your eyes peeled for your next exciting issue of Investment Academy on Wednesday.

Till next week, here's to your financial freedom…

Karin Iten
For the Investment Academy