ALEXANDER FORBES HEALTH. PRESENTED BY: Anthea Towert, Certified Financial Planner

Transcription

1 ALEXANDER FORBES HEALTH PRESENTED BY: Anthea Towert, Certified Financial Planner

2 Agenda Need for medical scheme cover in retirement Cost of medical scheme cover in retirement Factors to consider when choosing a scheme How to choose the right benefit option Waiting periods and penalties Appointing a broker

3 Feedback form

4 Industry Regulator Medical Schemes Act Council for Medical Schemes Medical Scheme Separate legal entity, not-for-profit Trustees Act in members best interest Members Rights and responsibilities Overall responsibility, Strategic oversight Delegate operational management Executive/ Principal Officer For-profit entities Outsourced duties Administrator Managed care provider External auditor Accredited brokers (open medical schemes) Actuary, Investment manager

5 Need for medical scheme cover in retirement

6 How claims change over a lifetime Individual Claims Family Claims Age

7 How medical needs change over a lifetime R 1,000 to R 2,100 Hospital cover Limited or no day-to-day cover Stage 1: Young, single member (PM) Stage 2: Married with children (PAC) Hospital cover Limited chronic benefits Maternity benefits Medium day-to-day cover R 3,000 to R5,400 R 5,500 to R 7,000 Hospital cover High chronic benefits High day-to-day cover Stage 3: Retired (PA)

8 Cost of medical cover in retirement

9 Dilemma: Health needs vs ability to pay! Income Medical Expenses

10 Total Liability (R' Millions) Post-Retirement Medical Aid Liability by ERA and Current 60 yrs 65 yrs R0.900 ERA = 55 years ERA = 58 years ERA = 60 years ERA = 63 years ERA = 65 years ERA = 67 years ERA = 70 years Current Age - Single female

11 Total Liability (R' Millions) Post-Retirement Medical Aid Liability by ERA and Current 60 yrs 65 yrs R1.739 ERA = 55 years ERA = 58 years ERA = 60 years ERA = 63 years ERA = 65 years ERA = 67 years ERA = 70 years Current Age - Married male

12 Total Liability (R' Millions) 2.0 Post-Retirement Medical Aid Liability by Benefit Option Type and Age R1.867 Comprehensive Option Intermediate Option Basic Option R R Current Age - Married Male

13 What to consider when choosing a scheme

14 Why medical scheme cover and not insurance? Health Insurance Medical Schemes Governed by LTIA and STIA Medical Schemes Act Regulatory body Financial Services Board Council for Medical Schemes Product Benefits Policy benefit Underwriting For profit, based on a health event Activated by the diagnosis of an insured health condition Lump sum or annuity paid to policy holder Allowed, contributions based on age/health status Not-for-profit, based on a health service obtained Triggered by the use of a relevant health service Reimbursement of the actual expense or part thereof paid to provider or member Not allowed, contributions based on family size/income Renewal Annual at insurers discretion Guaranteed for life Tax status No tax deduction Tax credit

15 Factors to consider when choosing a scheme Size/Growth Larger schemes have more stable and less volatile claims A growing scheme indicates attractiveness of the product Age profile Impacts directly on claims and influences contribution increases Operating results Positive results grow reserves and lead to lower contribution increases Solvency Minimum requirement is 25% Schemes below 25% must grow reserves either through higher contribution increases and/or benefit restructuring Contribution history An indication of how well a scheme can mange its claims and its risks

16 Number of principal members Top 10 schemes in terms of size 1,400,000 1,200,000 1,000, , , , ,000 0 Discovery Bonitas Momentum Medihelp Bestmed Medshield Fedhealth Liberty Sizwe GEMS 2012 Principals 2013 Principals

17 Financial results and solvency Operating Result (R' Millions) Net Result (R' Millions) Change in Solvency R 1,600,000 10% R 1,440,000 R 1,280,000 8% R 1,120,000 R 960,000 6% R 800,000 R 640,000 4% R 480,000 R 320,000 2% R 160,000 R 0 -R 160,000 Bestmed Bonitas Discovery Fedhealth Liberty Medihelp Medshield Momentum Sizwe 0% -R 320,000-2%

18 Solvency and contribution increases 14% 12% 10% 8% 6% 4% 2% 0% Bestmed Bonitas Discovery Fedhealth Liberty Medihelp Medshield Momentum Sizwe -2% -4% Change in Solvency 2015 Increases CPI Medical Inflation

19 What to consider when choosing a benefit option

20 Benefit structure Entry level Mid-range Top range Hospital care 100% Closed network Hospital care 100% to 200% Open network with deductibles Hospital care 200% to 300% Free choice Chronic care 27 PMBs only Tight medicine formulary Basic oncology Chronic care 27 PMBs only Richer medicine formulary Extended oncology Chronic care 27 PMB plus extra list Rich medicine formulary Rich oncology Day to day care None Primary care network only Limited specialist care on referral only Day-to-day care Savings only Traditional with limits Incentives to use DSPs Necessary Specialist care Day-to-day care Savings plus insured benefits Traditional with high limits Free choice Rich Specialist care Supplementary care None or limited Supplementary care Preventative Screening Loyalty progarmme Supplementary care Preventative Screening Loyalty programme

21 Benefit option Contributions Income based Family size only Option changes Annually During the year Benefit design Insured benefits only Medical savings plus insured benefits Benefit payment 100% to 300% scheme rate (mainly in-hospital) Negotiated provider rates

22 Benefit option Benefit access Free choice Designated service provider Provider network Benefit limitations Rand value or number of services Co-payment % Deductible (R) Medication formulary Supplementary benefits Emergency evacuation International medical cover Prevention and screening Loyalty programmes Gap cover for in-hospital shortfalls

23 Entry controls: Waiting periods and late joiner penalties

24 What are entry controls? Tools used by medical schemes to help protect the scheme from anti-selective behaviour by members (new members joining a medical scheme only when they become ill so that they can immediately access and maximise benefits) Two types: Waiting periods Late Joiner Penalties

25 What is a waiting period? Period of time during which a new member pays a monthly contribution but cannot claim any benefits Calculated on application and activated on 1 st day of membership Applied individually to each beneficiary (member and dependants) Don t apply when changing benefit options, only when changing schemes Two types (run concurrently): 3-month general waiting period 12-month condition-specific waiting period

26 Waiting periods table

27 What is a Late Joiner Penalty? An additional risk contribution charged to an applicant who is 35 years or older on date of application Calculated on application and activated on 1st day of membership Penalty ranges from 5% to 75% of risk contribution Applies if applicant: does not have sufficient years of creditable coverage had a break in membership between schemes of longer than 3 consecutive months

28 What is a Late Joiner Penalty? Creditable coverage is an period of S.A medical scheme cover as a member or adult dependant (over age 21 years) Foreign medical cover does not quality Late joiner penalties remain for life (carried with you when you change schemes)! Applied to each applicant individually, not the family unit

29 Appointing an adviser

30 Appointing an advisor Medical scheme cover is one of the biggest expense costs in retirement Re-evaluate every year in line with your needs and affordability Commission is regulated and included in standard contributions 3% plus VAT of monthly contribution capped at R71 per month Speak to your financial planner / broker Option choices at year-end Product queries Escalated claims queries Complaints and Disputes

31 Thank you I Questions?