Think ‘Out of the Box’ and Save on Medical Aid
Medical aid is a big expense. It’s a necessity for every individual and household but it hurts the pocket.
So, are there ways in which you can still get excellent medical aid cover but don’t have to pay and arm and a leg?
Yes there is!
Just note that every family and individual circumstances are unique. First consult an accredited medical aid broker before making any decision.
What I am about to explain can be applied to all medical aid options. I am using Liberty medical aid as an example.
Let’s assume a family of 5: 2 adults and 3 children. Let’s further assume that this family choose the Complete Standard option on the Liberty medical aid list of options. In 2015 the total cost for this medical aid for this family would be R6,120pm. This premium will include dentistry as well as a savings component that can be used for GP visits, medicines and other out of hospital medical expenses.
Now, if this family can comfortably afford this, then they should opt for this option as it is an excellent choice on the Liberty medical aid list.
However, if this family does not get sick that often and does not visit the GP regularly or does not need regular medicines, then why choose an option where you pay a premium for a savings component?
Why not rather choose a hospital option for this family and use the difference in savings to fund your own out of hospital medical expenses?
If this family decide to insure their health through the Liberty medical aid Hospital Standard option they will still get excellent hospitalisation cover for both emergency and non-emergency procedures.
However, they will have to pay for GP visits, medicines and other out of hospital expenses from their own pocket.
But now, this family only pay R4,073pm. That is a saving of R2,047pm or R24,564 per annum. Remember, this is a healthy family that does not go to the GP regularly nor need to purchase medicines often. Over a 4 year period this family would have saved almost R100,000!!
They still get great Liberty medical aid cover. But now they have chosen an option that fits their pockets better.
How can this saving be better utilised?
1. Build up a medical expense reserve:
This is important as this family does not have a savings component attached to their Liberty medical aid hospital plan.
If they are not sickly, then a saving of about R20,000 to R30,000 should be sufficient for out of hospital medical aid expenses. In other words, pay your GP and medicines from this savings account that you build up yourself at your own bank.
The big advantage is that you can use this savings for anything, although the primary goal should be for medical expenses. When you dip into your savings account just top it up again.
The key here is to be disciplined. If you use this money to buy the latest LED 3-D TV, you are not wise.
2. Pay off Debt:
Get rid of debt a.s.a.p. I have met many clients whose credit cards are their biggest enemy. Pay it off!
Start with debt that attracts the highest interest rate and get rid of it (like credit cards). Then start to pay off debt with the 2nd biggest interest rate attached to it (usually your car). Then pump that savings into your mortgage.
Let’s assume this family have a mortgage of R1,000,000 over 20 years and pays 9.5% interest on it. Over 20 years they would pay the bank R2,219,544 of which the interest portion would be R1,219,544.
If however this family decide to use the savings from their Liberty medical aid and add R2,000pm to their bond, they would pay off this debt within roughly 12,5 years (not 20 years). Over 12,5 years they would pay the bank R1,709,295.35 of which the interest portion would be R709,295.35.
That’s an interest saving of R510,249. That is a huge saving
3. Invest the savings:
You have to ask yourself whether you can earn more on the market over the long term than the interest you are paying on your debt.
Example: If your mortgage attracts 9.5% interest per annum but you can make about 12% per annum on the stock market, then theoretically it does make more sense to invest rather than to pay off debt.
However, if your debt attracts 25% interest (like credit cards) then it would make a lot more sense to pay off the debt first. Remember, you will need to earn a NET figure of let’s say 12% (i.e. after admin fees, platform fees, commissions, etc) in order to justify investments above paying off debt.
Some people might prefer to use the savings and to start saving for their children’s future education. If these funds are allocated into good investment vehicles where the client does not pay exuberant fees, then you can build great wealth
There are many other ways that you can save money without losing any significant benefits. But it does differ from family to family and individual to individual.
What I explained above can be applied to any medical aid and Liberty medical aid is no exception
If you are unsure on what the best option for you would be, feel free to give me a call
Liberty Medical Aid Options:
Whatever your budget or needs, chances are very good that you will find what you are looking for in Liberty’s diverse range of options:
Liberty Medical Aid Hospital Options:
Liberty have 3 different options available under this category namely:
To whom would this option appeal? Ask yourself this question – Do I have regular day to day medical expenses? If the answer is no, then this one is for you. This option is the most affordable on the Liberty medical aid scheme mainly because the client will pay for day to day expenses out of his or her own account. Since the client in general does not have many day to day medical expenses this won’t be an issue. You have excellent hospital benefits plus some extraordinary out of hospital benefits.
Again you can choose from 3 different options available under Liberty’s saver options. They are:
The difference between the Saver options and the Hospital options are that the Saver options have a – you guessed it – a savings options attached to it. This option is ideal for the person who wants a comprehensive hospital plan but would also like his or her day to day medical expenses to be covered. The members of the saver options would typically not claim that much for day to day medical expenses during the year but would like to know that some savings are available should they need it. Their hospital cover is also the best in the market.
Once more you can find 3 different options under the Liberty medical aid Complete option. They are:
These options are by far the most popular at Liberty medical aid and if you have a look at all the benefits you and the family are getting and compare that with the monthly premium, you would understand why. A huge amount of savings are allocated to each medical aid member and even some dental procedures are covered from the Liberty medical aid bank account, not yours. Members who have joined this option give a lot of praise for the benefits that they receive and the comprehensive nature of this package.
The Traditional Standard option is ideal for those individuals or families who wish to make use of network GP’s and dentists that will be covered by their risk premium. There is some limitations to their hospital benefits. Please see more details on this option by clicking here.
The Traditional Ultimate option is Liberty’s top of the range option. The benefits on this option is bar none. If you would like to chat about this option in person, kindly contact me and we can talk in person. For more information on this option, please click here.
Call JP Roux for Any Questions You May Have!
PS – If you want to reach the official Liberty Medical Scheme site, please click here