It’s not often that there’s good news lately, but when medical aid provider Fedhealth released its 2022 Rates & Benefits this week, its members were left with smiles on their faces. The medical aid scheme announced that members would receive a host of new benefits in the first quarter of 2022, but would not have their contributions increased until April. Instead, Fedhealth will be using R105 million of its own reserves to fund the difference, giving its members a much-needed financial breather during these challenging economic times.
“We believe that our benefits enhancements, together with the increase holiday, will provide our members with real-world, practical value as well as a financial breather to help with those overstretched budgets over the December holidays and January school expenses,” says Fedhealth Principal Officer Jeremy Yatt.
How have benefits increased while rates stay the same?
In short: Fedhealth’s prudent approach to managing reserves. In 2020 there was a reduction in the scheme’s number of hospital admissions, primarily driven by a deferral of non-emergency elective procedures, so the Scheme was in a fortunate position of having their reserves grow by R189 million.
Fedhealth opted to manage these reserves responsibly, choosing a prudent view when setting contributions for 2021. They did this because they were concerned about the spread of COVID-19 and the severity of the second and third waves, as well as vaccine availability as part of South Africa’s vaccine rollout strategy. “We also knew that a catch-up of these deferred electives was a real possibility that we needed to plan for, and we certainly didn’t want to reduce members’ benefits in any way,” says Yatt.
With this approach, their membership in 2021 was stable, despite a tough economic environment, with 6000 new members joining over the year, and 36.5 years being the average age of new members.
Benefit enhancements for 2022
The new benefits announced for 2022 cover all ages and stages. First up, Fedhealth has introduced a new income band for myFED, where members within this category will experience reductions in their contributions of 10.7%. Yatt says that the aim with this is to make medical aid even more affordable for some corporate members.
Another new benefit is to have more preferred providers for cancer treatment. Up to now, the Independent Clinical Oncology Network (ICON) was a DSP on most options for oncology treatment with a co-payment of 40% for voluntary non-use. From 2022, all members on all options have the choice of an oncologist with ICON or SAOC (the South African Oncology Consortium). Both ICON and SAOC are preferred providers rather than DSPs, which means access to most oncologists in the country and therefore no co-payment for voluntary non-use.
In terms of preventative health, Fedhealth will now cover from Risk the HPV vaccine for girl beneficiaries between the ages of 9 to 14 as part of the screening benefit for children. For the mammogram as part of Fedhealth’s screening benefit, these will now be covered once every two years, as opposed to once every three years as was the case previously.
Fedhealth has also introduced a new stress and anxiety benefit on their flexiFED 1 option in response to the negative effects of COVID-19 on mental health, particularly on the younger population. This benefit will deal with stress and anxiety by means of virtual consults with a psychologist, that is paid from Risk and not day-to-day benefits.
“I think the stress and anxiety benefit is quite unique at this stage,” says Fedhealth Principal, Jeremy Yatt. “Most schemes have a general mental health benefit of some sort, but this is specific related to stress and anxiety only, with the focus on young lives and the effects of the pandemic on them.”
2022 contribution considerations
To ensure sustainable contribution increases, Yatt says an average of 7.4% is actually required, but as a result of the Scheme ploughing back its reserves, members will only face a 5.5% annualised increase for 2022 contributions, which will only kick in from 1 April. These increases will be as follows:
In general, Yatt says there will be no double-digit average increase for any benefit option, and no big swings in future contribution increases over the next few years. “We’ve secured CPI related increases for the majority of lives and there is a smooth progression of contribution increases from bottom to top options,” he says.
