Cheaper health insurance can look like a lifeline, but could fall short for a serious claim

Cheaper health insurance can look like a lifeline when the cost of living and the cost of medical aid schemes keep climbing. Medical schemes had an average contribution increase of 8.10% in 2026, and new entrants and current members alike are asking whether health insurance could take the place of medical aid. Lee Callakoppen, the principal officer of Bonitas Medical Fund says the difference may only become clear on the day it matters most, with a serious diagnosis, a long stay in hospital or a real emergency. Callakoppen said in an interview with BizNews that health insurance falls outside the Medical Schemes Act and works within set limits and exclusions, while a medical scheme is compelled to pay for prescribed minimum benefits even when your savings have run out. He explains what that gap can mean when you claim, and what to weigh up before you make the switch.

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Edited transcript of the interview

Linda van Tilburg (00:00)

In South Africa, there's a growing trend, particularly among people who have never had private healthcare before, to take out health insurance instead of joining a medical scheme. But health insurance, gap cover and medical aid are not the same thing, and the difference could matter a great

deal on the day that you need to claim. Joining me in the studio to discuss these differences is Lee Callakoppen, principal officer of the Bonitas Medical Fund.

With the higher cost of living, some South Africans to consider health insurance instead of a medical scheme. What's driving this shift?

Lee Callakoppen (00:48)

Linda, it's a very good question and a pressing reality for most South Africans. Medical aid is a grudge purchase and probably the first thing to go when we have an economic downturn. Most consumers then ask what the alternative is. Can I just have health insurance? And sometimes people confuse the two, so perhaps I can dispel that. A medical aid is vastly different from a health insurance product.

First of all, a medical scheme is registered under the Medical Schemes Act, which is well formulated and articulated. It ensures that certain basics, such as the prescribed minimum benefits for access to healthcare, are available, and that is well regulated and managed so that you have comprehensive healthcare cover, depending on the option you choose.

Further to that, an option is registered by the medical scheme and approved by the Council for Medical Schemes before the scheme can offer it. A health insurance product is not regulated under the Medical Schemes Act, and it doesn't necessarily cater for prescribed minimum benefits. So yes, it's costed much cheaper, and its set on certain limits that people can access.

You also spoke about gap products. A gap product is normally there to complement or supplement your medical aid, so gap products and medical schemes work very well together to help you manage the risk you may experience. But health insurance cannot replace a medical scheme, Linda.

Linda van Tilburg (02:37)

So, do you find that health insurance is more for people who've never had medical aid, that they're starting to take that up instead of going straight to a medical scheme?

Lee Callakoppen (02:46)

Linda, I can't state that categorically, but what we have seen, purely based on price point and how health insurance is marketed, is that members choose to leave a medical scheme and join a health insurer based on the rand value of the product. But in my humble opinion, it's not at the same level of comprehensiveness that a medical scheme would offer you.

And we have seen cases from our experience at Bonitas where people insist on a cheaper offering and leave a medical scheme but soon return. I've seen that with a big corporate pay point, an employer group that chose that option because they were under pressure from the employer saying, but we want to pay less. Two years later, we found that same employer group coming back, because the employees started complaining, saying, what I'm paying for, and when I go to a dentist or a hospital I'm faced with so much more cost, they don't cover me for it. They opted to rejoin the medical aid.

Linda van Tilburg (04:04)

So, what would you say to people who say, well, maybe I should go for health insurance because I can't afford a medical scheme?

Lee Callakoppen (04:13)

It's a very real question that South African consumers ask themselves. The question I would ask is, have you done a proper health assessment of what your health needs are and what the risks are? If you are a person with a chronic condition, and chronic conditions also fit within prescribed minimum benefits, is your health insurance product going to cover that, and what will be out of pocket for you?

It's important to do that like-for-like comparison, because when that assessment is done, you will soon realise that a lot of what's on offer in the insurance space might not cover you to the same comprehensiveness that the Medical Schemes Act enables or compels a medical scheme to cover a

member for.

Linda van Tilburg (05:08)

So, is that the real difference, the fact that there's different legislation governing medical aid schemes and health insurance?

Lee Callakoppen (05:19)

I would say that you have greater peace of mind based on the regulation we have under the Medical Schemes Act, under which a medical scheme and an option must be designed for members, versus how health insurance operates and what it covers in terms of limits for you.

Linda van Tilburg (05:40)

So, what's the difference when you start claiming between health insurance and a medical scheme?

Lee Callakoppen (05:46)

Well, within a medical scheme, you have an option with clearly set rules and benefits, and your claims, whether they relate to prescribed minimum benefits or anything else, are considered and adjudicated against that. If you are faced with a prescribed minimum benefit condition, even if you don't have savings available, a scheme is compelled to pay for it, subject to the clinical codes and rules meeting the set criteria.

With a health insurer, what you find is that there are prescribed limits. Yes, you can have three or four GP consults, and your insurer will pay for them. But once a diagnosis comes through that says you have cancer or a hypertensive condition, all of those aspects will either be exclusions or subject to the rules associated with that insurer.

That is why you find the cost difference that consumers see at face value. Insurers don't have the obligation or responsibility to pay the additional costs that a medical scheme is normally compelled to pay.

Linda van Tilburg (07:18)

So, what would your advice be for somebody who says, no, no, I'm going to change from a medical scheme to health insurance?

Lee Callakoppen (07:32)

First of all, understand what your healthcare needs are. I might sound like a broken record, but you have to assess that as you go through your various life stages. Understand the cost of what you've claimed in the past year, or two or three years, and understand what your future plans are.

Keep in mind that even if you leave a medical scheme to go to an insurer, you might be faced with waiting periods and late joiner penalties when you come back. Those aspects must all be weighed up.

As medical schemes, we are comfortable, through our retentions department, giving members advice when they are faced with financial pressures, before they make that decision. Alternatively, if you belong to an employer group, there would traditionally be brokers linked to that group. Engage with a broker or healthcare consultant who can talk you through the detail of the pros and cons of a health insurer versus a medical scheme.

Linda van Tilburg (08:47)

What if somebody says, I only want hospital cover and a couple of virtual GP consultations? What can you offer them instead of that?

Lee Callakoppen (08:58)

Linda, a very good question, and that's one of the aspects of our product philosophy. Our tagline at Bonitas is being a medical aid for South Africans, because we are the second largest open medical scheme in South Africa. For that reason, we must be able to cater for all South Africans, at all life stages and whatever fits their financial budget.

So, we have multiple options spanning all life stages and price points, from hospital plans to classic plans to new age option plans. A member can choose what best fits their current life stage and pocket.

And yes, we have options that cater purely for those who want a hospital plan. But what is also innovative for us is a product called our Benefit Booster. By understanding your health status, doing health screenings and giving us the data, we unlock additional benefits outside of just having a hospital plan, such as consulting a GP or a dietitian to understand where you are at. Understanding your health status might change your mind considerably about investing in an option other than a hospital plan, so that you can be on an option with a disease programme or preventative care solution that helps you sustain a better quality of life.

Linda van Tilburg (10:59)

Yes, because I think what it's about is this large group of people who have not joined medical aid schemes, maybe because they think it's unaffordable. So, what can you offer them?

Lee Callakoppen (11:03)

By way of example, for our younger people, our new gen, we introduced what we call our BonStart /BonCore option, Linda, which is very well placed for younger people who are just joining and don't earn big salaries. We call it a network and digital option. You consult and use digital consulting tools with a virtual doctor.

Further to that, we've embedded networks in the option. By selecting the option and using a network, you get a much more cost-effective price for certain treatment. We are not denying the quality of care, but by virtue of people using those options, contributions become much lower. It enables people to have unlimited hospital cover combined with GP consultations, lowering the cost of the option while maintaining the quality of care that people have become accustomed to with Bonitas.

Linda van Tilburg (12:28)

So, if you have to summarise this whole debate of health insurance versus being on a medical scheme, what would be the benefits for somebody to come to Bonitas rather than taking out health insurance?

Lee Callakoppen (12:43)

The benefit of joining a medical scheme, and being on Bonitas, at the end of the day is comprehensive cover, and I want to underscore comprehensive cover. Comprehensive in the context of what regulation under the Medical Schemes Act has set out to protect the consumer. It is regulated and covers key aspects to provide access to quality care, such as prescribed minimum benefits and a code under which a healthcare episode needs to be considered.

With a health insurer, they specify limits up to a set amount. Even with hospital plan-related insurance, they don't consider the underlying treatment. They may pay you an amount if you've been in hospital

for more than three days, but what is paid back doesn't necessarily cover the healthcare episode and the underlying treatment required.

Linda van Tilburg: Well, Lee Callakoppen, thank you so much.

Lee Callakoppen: Linda, thank you once again for having me.

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