CAMAF Member Option Guides & Info

2 1.1 What is the pURpOse Of a medical scheme? medical schemes, as is the case with most insurance, were established originally to provide cover for unexpected health events for which an individual had not budgeted or could not afford. medical schemes are to health expenditure what motor insurance is to serious accidents. a medical scheme is simply a pool of members' money, with benefits designed to maximise the use of these funds for the health benefit of all its members. A medical scheme is a non-profit organisation with no shareholders. It is a collective funding mechanism to ensure that its members receive appropriate clinical treatment, as and when needed. it therefore does not operate to enrich anyone financially. All unutilised premiums earmarked for medical expenditure and administration costs remain in the reserve pool. these may be drawn on in years where the claims exceed the budget. It is therefore important for a scheme to have sufficient reserves to be able to cover the costs of unexpected events, e.g. should there be a swine flu outbreak. In the rare event of a scheme having to dissolve, the unutilised reserves are distributed amongst the active members. Premiums and benefits are designed to incorporate PMB's (see paragraph 1.2 below), members' claiming patterns, cost escalation of healthcare and other services. members can therefore play an active role in helping to contain the premium increases by striving to lead healthy lifestyles thereby minimising their health spend and limiting their 'down time' owing to illness. Medical scheMe vs. loyalty prograMMe individuals are often attracted to medical schemes by the scheme's "optional extras" or "bells and whistles", e.g. cheap flights and movie tickets. Although these items may have a tangible benefit as it is perceived to take some of the grudge out of the medical scheme purchase, it is important to note that these perceived benefits are completely divorced from the medical scheme offering. There is an additional premium for them. In practice it is generally much cheaper to pay full price for flights and movie tickets than have out of pocket expenses for hospitalisation. sadly, in many cases, people do not realise the full value of their medical scheme until they become seriously ill or have an accident, and need to claim. it is therefore important that members avoid the mistake of choosing their medical schemes based on a loyalty programme. schemes are progressively moving towards preventative healthcare. and, while reduced fees for gyms through the loyalty programmes assist in this endeavour, keeping members healthy is a far more complex issue. The lower the claims are, the less the draw on benefits. In the long run, this can lead to lower scheme contributions.

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