Discovery Health increases medical aid contributions

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

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“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”.

Main member contribution

2020 2021 July 2021 Change
Executive Plan R7 257 R7 257 R7 688 5.94%
Classic Comprehensive R5 954 R5 954 R6 309 5.96%
Classic Delta Comprehensive R5 362 R5 362 R5 681 5.95%
Essential Comprehensive R5 003 R5 003 R5 301 5.96%
Essential Delta Comprehensive R4 507 R4 507 R4 775 5.95%
Classic Smart Comprehensive R4 327 R4 327 R4 585 5.96%
Classic Priority R3 814 R3 814 R4 041 5.95%
Essential Priority R3 278 R3 278 R3 472 5.92%
Classic Saver R3 290 R3 290 R3 485 5.93%
Classic Delta Saver R2 628 R2 628 R2 784 5.94%
Essential Saver R2 615 R2 615 R2 770 5.93%
Essential Delta Saver R2 085 R2 085 R2 209 5.95%
Coastal Saver R2 608 R2 608 R2 763 5.94%
Classic Smart R1 954 R1 954 R2 070 5.94%
Essential Smart R1 400 R1 400 R1 483 5.93%
Classic Core R2 449 R2 449 R2 594 5.92%
Classic Delta Core R1 960 R1 960 R2 076 5.92%
Essential Core R2 104 R2 104 R2 229 5.94%
Essential Delta Core R1 681 R1 681 R1 781 5.95%
Coastal Core R1 946 R1 946 R2 062 5.96%
KeyCare Plus R0-8 550 R1 207 R1 207 R1 279 5.97%
KeyCare Plus R8 551-13 800 R1 659 R1 659 R1 758 5.97%
KeyCare Plus R13 801+ R2 450 R2 450 R2 595 5.92%
KeyCare Core R0-8 550 R949 R949 R1 005 5.90%
KeyCare Core R8 551-13 800 R1 183 R1 183 R1 253 5.92%
KeyCare Core R13 801+ R1 809 R1 809 R1 916 5.91%
KeyCare Start R0-9 150 R914 R914 R968 5.91%
KeyCare Start R9 151-13 800 R1 538 R1 538 R1 629 5.92%
KeyCare Start R13 801+ R2 394 R2 394 R2 536 5.93%

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.

All plans with a medical savings account will have a 5.9% increase on their savings contributions, which will also increase their savings account balance from July 1.

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”.

Source: moneyweb.co.za