Members and beneficiaries of the most popular plans offered by Discovery Health Medical Scheme (DHMS) will see sharp cuts to their medical savings accounts (MSAs) from 2024.
The group sold this in its announcement about the increases for 2024 by highlighting that practically four in every 10 scheme members (39%) will experience an increase in contributions of less than 4% from January.
Read/listen: Here’s how much more Discovery medical aid members will pay next year
The cuts will be made on the two most popular plans (excluding entry-level KeyCare) – Classic Saver and Essential Saver – which have around half a million members between them, including the network provider variants (Classic Delta Saver and Essential Delta Saver). The Classic Saver plans will see contributions increase by 3%, while the Essential Saver ones will be 3.8% higher.
However, buried in its announcement about the increases are the changes to MSA allocations from 2024. DHMS simply mentions the allocations for each of the five plans (the four mentioned above plus Coastal Saver, which is close to a network plan in itself).
To achieve the sub-4% increases for these plans, it has cut the allocation to the MSA from the net contribution paid by five percentage points.
For the Classic Saver plan (including the Delta variant), the allocation is reduced from 25% to 20%, Essential Saver (and Delta) from 15% to 10%, and Coastal Saver from 20% to 15%.
How these hits translate …
This means that for a main member on the Classic Saver, their MSA will drop from R12 180 this year to R10 020 next year.
On Essential Saver, the MSA will reduce from nearly R6 000 this year (R5 796) to R4 008 in 2024.
These are material reductions.
In the case of Essential Saver, the cut is 33% (from 15% to 10% allocation), on Coastal Saver it is 25%, while on Classic Saver the drop is 20%.
Where the change becomes even more acute is in the allocation to the MSA for children.
On Classic Saver, the MSA decreases from nearly R5 000 (R4 872) this year to R4 020 in 2024. On Essential Saver, it goes from R2 316 to just R1 596. In rand terms, this means a reduction of 18% for Classic Saver and just over 30% for Essential Saver.
Mothers will know exactly how little R1 500 a year in medical aid savings is.
‘Optimisation’ and new benefits
According to Discovery Health CEO Dr Ryan Noach: “The increases in gross contributions … allow for optimisation of Medical Savings Accounts [MSAs] on the Saver Series plans, considering the affordability challenges and the introduction of new benefits for DHMS members, previously funded from MSA.
“These include virtual urgent healthcare and cognitive behavioural therapy [CBT] online for depression and anxiety.”
Had DHMS not implemented these reductions to the MSA allocations, the contributions for these plans would’ve increased by between 8% and 11%.
This would’ve meant a big jump from its current average increase of 7.5%. Without those MSA changes, the average increase would’ve been 10.25% (excluding Classic Smart Comprehensive). DHMS excludes this plan from its calculation to get to the 7.5% too.
Change or stay put?
The structural change to the Classic Smart Comprehensive plan, with the introduction of a MSA from next year, means contributions to this specific plan will jump by 32%.
A plan that currently costs R5 441 will be R7 163 in 2024.
This is a slightly unfair comparison in an analysis like this, but the lived reality of members on the Classic Smart Comprehensive plan will be a nearly R2 000 jump in contributions for the main member.
Those members will need to carefully consider whether to remain on this plan (which is a different proposition from January) or change to another plan.
Read: Medical schemes told to keep 2024 contribution increases to 5% or less
“While the long-term sustainability of DHMS is paramount, we remain extremely sensitive to the economic environment and affordability pressures that Scheme members are currently facing,” says Noach.
“We are keenly aware of the far-reaching impacts of increasing inflation, high interest rates and low GDP growth on households and businesses in our country.
“With this in mind, we strive to maximise value for members of the scheme whilst maintaining the long-term sustainability of the medical scheme.”
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