As we approach retirement, one of the most pressing concerns that we face is how to manage our healthcare costs related to growing older, particularly those associated with medical aid. With rising medical expenses and the unpredictability of health issues in later years, it’s safe to say that it is crucial for retirees to have a well-thought-out strategy in place.  

Medical aid not only provides essential cover for hospital stays and treatments but also plays a vital role in ensuring access to quality healthcare services. Understanding how to effectively manage these costs can significantly impact your financial security and overall quality of life during retirement. 

In this article, we will explore practical strategies for South Africans to navigate their medical aid expenses as they transition into retirement. From choosing the right medical aid plan to understanding the benefits of preventative care, we will provide insights that empower retirees to make informed decisions.  

Understand Medical Inflation 

Before even comparing quotes and plans, you should take note of the fact that medical inflation in South Africa is consistently higher than regular inflation. Essentially, your healthcare costs will rise faster than other expenses, making it vital that you allocate a larger portion of your retirement savings specifically towards healthcare. 

Choose Wisely 

Many medical aid schemes offer specific plans tailored for retirees, which may include benefits that cater to older members. While you’re looking around, you’ll need to consider your healthcare needs as you transition into retirement, taking into account the effects of aging and how this will impact the plan that you need. Through this lens, you can vet options that provide comprehensive cover for things like chronic conditions or anticipated health issues, while also considering affordability.  

As you evaluate the different plans, make sure that you take the time to thoroughly understand how you will be covered.  

Tips to understanding each plan: 

• Familiarise yourself with what is covered and what isn’t.  

• Identify what your plan includes when it comes to hospital stays, specialist visits, and chronic medication.  

• Review the specifics of your cover to help you avoid unexpected costs and make informed decisions about your healthcare.  

• Check for preventative care services and if there are costs involved. 

Build Up Savings 

One thing to look into is a savings component to your plan. There are a number of medical aid schemes that provide savings components within their plans, allowing you to accumulate funds over time. This can be an effective way to manage out-of-pocket medical expenses during retirement. In fact, plans like those offered by Momentum and Sanlam go so far as to highlight the importance of building up these savings throughout your working life to reduce financial pressure during retirement. They’re not wrong, this is sound advice. 

However, you could also start setting aside additional savings or establishing a separate retirement annuity (RA) that focuses on covering medical expenses. Taking advantage of tax benefits linked to RAs also helps boost your savings over time. 

Review And Adjust Regularly 

If there’s one thing that we know for sure about aging, it’s that it never stops, and when you consider the ongoing impact of aging on your health, it makes sense that your healthcare needs would evolve over time. For this reason, it’s essential to review your medical aid plan annually, so that you can adjust your level of cover or change to a more suitable plan altogether. During this review process, compare different schemes and their offerings to ensure you are getting the best value for your needs without overspending on cover that you don’t need. 

Preventative Care 

Investing in preventative care is one of the most effective ways to manage long-term healthcare costs. We’re talking about things like regular check-ups, screenings, and vaccinations. These actions can help detect potential health issues early on when they are often easier and less expensive to treat. Thankfully, most medical aid schemes cover preventative services at no additional cost, so you should really take advantage of these offerings to maintain your health and reduce future medical expenses. 

Consider Gap Cover  

It can’t be overstated just how valuable a role that gap cover insurance can play. This type of insurance helps you to pay the outstanding amount leftover after your medical aid has settled their portion of your healthcare costs. You see, very often there’s a difference what your medical aid pays, and the actual costs charged by healthcare providers. As you can tell, gap cover doesn’t replace comprehensive medical aid, but it does provide you with additional financial protection to manage unexpected healthcare costs. 

Feeling informed?  

Medical expenses can become a significant financial burden in retirement. As people age, their healthcare needs tend to increase, and medical inflation in South Africa outpaces general inflation by 3-4% annually. Without careful planning, these rising costs can strain your retirement income and affect your standard of living.  

Selecting the right medical aid plan is fundamental to managing costs effectively, but the world of medical aid can be quite complex, especially when you factor in planning for your future healthcare costs. In this regard, we strongly recommend consulting with an accredited financial advisor so that you can make informed decisions about your financial future and your wellbeing will be catered for.  

Don’t forget that AA Inform is home to a range of useful financial tools and resources, including access our Loan Repayment Calculator, free property valuation reports, and multiple advice pieces on how to plan for your retirement.  

We trust that this will help you make the best choice for your financial future.