A decade ago, you didn’t have a medical savings account (MSA) on your medical scheme option. Now you do, and many people find it understandably confusing.
Comments and questions such as the following are frequently heard:
“If it’s my money, why can’t I spend it like I want to?”
“Why can’t co-payments come out of this account?”
“I don’t understand why I have sub-limits when everything is subject to available funds in the MSA.”
Here are questions and answers on the facts surrounding your MSA.
How is the MSA amount calculated?
The trustees of the fund (half are elected members) decide on a percentage allocation of your contribution to the MSA. This is usually done in conjunction with actuarial advisers, who consider things such as the amount of money in the reserves, claim patterns and the general solvency of the scheme.
If your scheme decides on 20%, and your contribution per month as a single member is R2 500, your MSA will contain R500 (20% of your contribution) x 12 months. That is R6 000.
Your MSA is calculated as a percentage of you and your dependants’ total contribution. So if you pay R2 500 per month, and your dependants each pay R1 250, it comes to a total of R5 000 per month. Twenty percent of that would be R1 000 per month, so the total in your MSA for the year would be R12 000 for all three of you together.
The maximum percentage allowed by the law is 25%. If it went higher than that, the solvency of many schemes would be at risk.
When do these funds become available?
These funds are all made available upfront at the beginning of the calendar year. Technically you could spend it all in January, but that wouldn’t be wise, as it would leave you short for the rest of the year. If you left the fund before the full year is over, you would have to refund the money on a pro rata basis. If you left in June, you would only have contributed R500 x 6 to your MSA, while you spent R6 000. That means you owe the fund R3 000.
Do all options have an MSA?
No, they don’t. It is usually the more comprehensive plans that have an MSA from which day-to-day benefits are paid. Hospital plans do not usually have MSAs. Some options fall in the middle, where you have a few day-to-day benefits, but not an MSA.
Why do I have specified day-to-day benefits if I have an MSA?
You might have a R3 000 limit for optical care, subject to funds available in your MSA. Or R3 500 for dental care. That means that you cannot claim for more than that amount for that specific treatment or procedure, even if you have money left in your MSA. It doesn’t mean that you get to spend all those funds put together.
What you claim adds up, though, and the benefits merely specify the maximum you can claim for a specific treatment or procedure if you still have funds in the MSA. Most schemes in South Africa have experienced a high claim pattern over the last few years and this has been a way of limiting claims.
What happens when my MSA runs out?
You are still covered for hospital events. You now go into a predetermined self-payment gap, after which you can access above-threshold benefits according to the rules of the specific option you have chosen. Chronic medication (for registered chronic conditions) does not come out of the MSA, but acute medication does, such as when you get a once-off prescription from the doctor.
What doesn’t come out of my MSA?
Anything that comes out of your overall annual limit, such as hospitalisation costs, or has a separate sub-limit and doesn’t specify that it is subject to available funds in the MSA. This differs from fund to fund and from option to option, so do check with your scheme. All prescribed minimum benefits have to be treated at cost (270 different medical conditions) by all schemes.
The following things could be subject to the annual overall limit rather than being paid from the MSA:
• possibly psychiatric costs;
• definitely chronic medicine, but you have to register this with your scheme;
• possibly immunisations and vaccinations;
• possibly MRI and CT scans;
• costs for the treatment of HIV (but you will have to register on your scheme’s programme);
• treatment for alcohol and drug dependency (usually subject to a sub-limit);
• emergency transport; and
• certain screening tests, such as mammograms and cholesterol tests.
Can I use the money in the MSA to fund co-payments?
No, this is not legal. Co-payments have to be made from your own pocket. If your medical scheme rate for dental work covers a maximum of R3 500, and your total bill comes to R4 000, you will have to pay in R500 yourself.
Do I lose the money I don’t use?
No, it gets carried over to the next year. If you resign from the medical scheme, the money will be paid out to you if there is anything left in your MSA.
Can one person in a family use up the entire MSA?
Yes, they can. This amount is allocated to the family as such, and the scheme does not differentiate between a member and his/her dependants. So if one person in the family has high-cost medical needs, it is possible that the MSA could be depleted.
Do I get interest on the money in my savings account?
Yes, you should.
What if I never use my medical savings account?
The money is yours, but if you never use it, and you are consistently healthy, it might be an idea to look at getting a hospital plan only. You can always upgrade again if you need to. (Remember, this can only be done once a year, usually in January.)