Choosing the right medical aid can be tricky. Too often, people fall into the trap of looking just at the size of a medical aid provider’s client base – but there are several other important factors to take into account.
Image by davedugdale (CC BY-SA 2.0)
A company’s solvency ratio is its total capital in relation to all the risks it has taken, or in medical aid terms, the number of members to which a medical aid provider is liable for paying potential claims. Essentially, the solvency ratio measures the risk that a medical aid provider won’t be able to settle all claims. The higher the solvency ratio, the more likely it is that the provider will be able to pay you out.
One problem with focusing solely on the size of a medical aid’s client base is that it overlooks the issue of solvency. The larger a group, the more of a problem a low solvency ratio is.
A credit rating is a value assigned to a company that quantifies its ability to fulfill its financial obligations, based on factors such as its history of honouring commitments and its short-term liquidity, access to alternative sources of funds and internal operations. Global credit ratings, or GCRs, range from A1+, which is the highest rating, through to C, which indicates that default is a real possibility.
Although a credit rating isn’t infallible, it’s a strong indicator of the likelihood that a medical aid provider will pay members what they’re owed.
As well as considering the solvency ratio and credit rating of a medical aid provider, you should investigate whether the provider’s membership numbers have grown or shrunk over the last few years. A provider may still have a large membership base and a high credit rating, but dwindling membership numbers are a potential indicator of a sinking ship.
Making the final decision
Once you’ve taken all relevant factors into account, making a final choice of a medical aid provider can still be a tricky task. Many providers appear to offer the same types of packages, with enticing rewards and benefits programs tagged on to make them more appealing. To make the best choice, you should compare a range of medical aid options. To do this, you can use an online medical aid comparison tool such as this one. This can save you time and money, making it easier to identify the best possible medical aid option for your needs.