What Fedhealth offers that other medical schemes don’t –25% possible savings on Fedhealth’s new model

At a time of recession when most consumers are battling to make ends meet, Fedhealth has introduced a revolutionary funding  model which can save members up to 25% of their monthly contributions.

Traditionally, up to 25% of members’ annual contributions are placed in their fund’s medical savings account (effectively as a loan) and used to pay for day-to-day benefits. The member is then required to repay this loan over a 12 month period irrespective of whether the member needs this amount or not. In an innovation likely to be rapidly copied, Fedhealth has turned this model around to allow members to only start paying for their day-to-day benefits if and only when they actually need those benefits. Only when they access this funding will they be required to  pay back that amount over 12 months, interest free.

This can make a meaningful difference to consumers’ financial position and represents a radical departure from how other medical schemes in South Africa model their funding of day to day benefits. The norm is to charge members for day-to-day benefits from the beginning of the year regardless of whether they have seen a doctor or purchased medicine or not.

Fedhealth’s new solution is a response to the findings and recommendations highlighted in the provisional report issued by the Health Market Inquiry (HMI) which underlined the urgent need to change the way medical scheme options are designed, says Jeremy Yatt, Principal Officer of Fedhealth Medical Scheme.

“There is marginal space to innovate given the legislative constraints on medical schemes, yet our new model clearly proves medical schemes can and should find new ways to empower members by addressing their concerns around affordability, transparency and flexibility,” he says.

“The outcome of research among our membership base convinced us that members want more of a say over what their cover should be; how their daily benefits are used and they don’t want to pay for benefits they are not using. Up till now, there was not one medical scheme in South Africa offering that level of flexibility. Medical schemes have been doing the same thing for decades, with negligible differentiation between schemes,” says Yatt.

Fedhealth is now also the only medical scheme to offer members a reduced monthly rate – via its MediVault and Wallet. “Based on each member’s unique profile and the core benefit bundle they select, a pre-approved amount is placed in their individual MediVault at the beginning of the year. This amount available is not pro-rated and funding of claims is done in a similar way  as in a traditional savings account, except that members only pay for it once they use it.

“When the member needs to pay for day-to-day expenses, they simply transfer the funds they need from their MediVault into their Wallet and only then start paying back those funds, without having to pay interest,” explains Yatt.

A pay-when-you-need-it medical savings account was not the only innovation introduced by Fedhealth: to increase the element of added choice its solution offers four core benefit bundles, “specifically tailored to different lifestyle requirements and which can be personalised even further to suit individual needs”.

Yatt explains that, “The flexiFED 1 benefit bundle is perfect for healthy, young single people looking for affordable, quality cover. Personalised benefits like trauma treatment, unlimited accident and emergency treatment and female contraception have been added here for example.

“FlexiFED 2 is more suited to young families starting out and this option is now rich in maternity benefits and some great lifestyle and childhood benefits. FlexiFED 3 has been tailored to young families making their way up in the world and also includes rich maternity, lifestyle and childhood benefits for families who are still growing.

“Finally flexiFED 4 has been designed for more mature families looking for all-inclusive cover. Personalised benefits like specialised radiology, child rates up to the age of 27, unlimited network GP consults from core benefit bundle and unlimited private hospital cover for planned procedures etc are just some of the key features offered under this bundle.


“All core benefit bundles come pre-packed with value-added benefits covered from Risk, not from the MediVault and Wallet,” concludes Yatt.