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Moneyweb
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3 minute read
24 May 2021
12:58 pm

Here are Discovery Health’s medical aid increases from 1 July

Moneyweb

The increase 'recognises the full impact of medical inflation on the scheme'.

Discovery Health offices in Sandton, Johannesburg. Picture: Gallo Images/Alet Pretorius

Discovery Health Medical Scheme (DHMS) will increase the contributions on all plans by 5.9% from 1 July.

This comes after it deferred any increases in January for six months. It was the “first and only” open medical scheme to do so.

It says the 5.9% increase “recognises the full impact of medical inflation on the scheme, and ensures that the scheme can offer affordable contribution increases in 2022 and beyond, which are expected to be below market averages”.

“By deferring the contribution increase to 1 July 2021, members saved in excess of R2.2 billion and will only experience an increase of 2.95% in their total contributions paid to the scheme during 2021.”

DHMS says “this is substantially lower than the next six largest open medical schemes in the industry, whose members have experienced an average increase of 5.5% in total contributions paid over the same period”.

The drivers of the 5.9% increase are as follows:

  • +3.3% for “tariff inflation” based on projections of the prevailing CPI rate for the year;
  • +3.0% for the “additional healthcare demand for managing Covid-19 waves”;
  • +2.0% for the cost of procurement and rollout of Covid-19 vaccines for members;
  • -0.9% for the “net impact of the decrease in non-Covid-19 demand occurring during peaks of the pandemic”, which is “substantially offset by the latent return of non-Covid-19 demand and supply expected from Quarter 3”; and
  • -1.5% for the “impact of Discovery Health’s advanced risk management techniques and participation in the scheme’s wellness programme, Vitality”.

Discovery says all plan benefits and hospital networks will remain unchanged and that “as a result of the mid-year increase, members will be allowed a once-off concession to upgrade to any Discovery Health Medical Scheme option effective 1 July 2021”. These need to be submitted by June 15.

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Discovery says members who “have reached their Above Threshold Benefit (ATB) before 1 July 2021 will remain in their ATB and continue to access the associated risk funded benefits”.

“The additional medical savings account allocation will be carried over to the next year or can be used for healthcare expenses not funded from the member’s ATB in 2021.”

Importantly, “limits, co-payments, deductibles and thresholds were increased on 1 January 2021, and will remain at their current levels for 2021”.

Smoother increases going forward

Discovery says the 5.9% “contribution increase is better aligned to healthcare utilisation experience expected over 2021, and partially accounts for the return of latent non-Covid-19 demand already experienced this year”.

Because of this, it says “future contribution increases will therefore require a lower contribution adjustment than other medical schemes in the market, creating smoother contribution increases for members in 2022 and beyond”.

It says that over time “DHMS has offered its members greater value through contribution increases that have been consistently lower than the industry average”. This equates to 17.3% “additional value” – in effect, its increases have been 17% lower than the next six largest schemes.

In its communication to financial advisors, Discovery is incentivising sign-ups to Vitality and Discovery’s Gap Cover products.

Until June 30, DHMS clients who are not yet on Vitality or Gap Cover “can join at no additional cost for three months”.

This story first appeared on Moneyweb and has been republished with permission.