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Choosing your health plan
Late Joiner Penalties
Waiting Periods and Exclusions
Prescribed Minimum Benefits
Children and Babies
Dependants
Comprehensive Cover versus Hospital Cover
Savings
Thresholds
Pre-Authorisation
Tax Deductions



In today’s fast-paced world it would be ignorant for one to think they did not need medical aid. Daily we read about serious accidents on our roads and people being injured due to crime. Unfortunately, State facilities are under-staffed and overworked. One would not necessarily receive the optimal treatment there, especially if the condition wasn’t considered life-threatening.

Click here to open our Medical Aid Quotation Form

CHOOSING YOUR HEALTH PLAN

Firstly there is a choice between medical aid and medical insurance. These two products are completely different. Medical aid is governed by the Council for Medical Schemes while medical insurance is governed by the Long and Short-Term Insurance Act.

A few differences between a medical aid and medical insurance are:

MEDICAL AID	MEDICAL INSURANCE
1.  Pays directly to a provider. 2.  Pays according to the National Recommended Price List (NRPL). 3.  Pays what the provider charges within the NRPL	1.  Pays the insured, 2.  Pays a lump sum or percentage of income and may be used for any purpose not only medical costs.

Once the choice between medical aid and medical insurance has been made there are further choices to be made.

If a medical aid is decided on, the following points need to be considered:

1. How much can I afford?

2. What type of cover do I need?

• I am healthy and single so I only need cover for in-hospital expenses (major medical expenses). I should be able to cover the cost of any day-to-day benefits like doctors, optometrists etc., that I may incur.
• My partner and I both are young and healthy, we need some day-to-day benefits to cover the cost of doctors, dentists etc. and we need comprehensive hospital cover. A savings plan with comprehensive hospital cover would be suitable for our needs.
• We are a young family and need day-to-day benefits and comprehensive hospital cover, a plan with a threshold would be ideal.
• We are older and have chronic conditions now. We need a comprehensive plan that gives maximum day-to-day benefits, unlimited hospital cover and good chronic benefits.

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What you should know?

1. Late Joiner Penalties

If you have not been a member of a South African medical aid continuously from the age of 35 a medical aid scheme may impose a late joiner penalty on you or your dependants. Once this penalty has been imposed and you change schemes the penalty will not fall away. The penalty band from age 35 is as follows:

1 – 4	years	(35 – 39)	0.05 x risk contribution (not including savings)
5 – 14	years	(40 – 49)	0.25 x risk contribution (not including savings)
15 – 24	years	(50 – 59)	0.50 x risk contribution (not including savings)
25+	years	(60 +)	0.75 x risk contribution (not including savings)

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2. Waiting Periods and Exclusions

In order for medical schemes to impose waiting periods and exclusions on members they take previous and continuous, membership into account. The table below indicates what waiting periods and exclusions may be imposed.

Never been on a medical aid or More then 90 days break	3 Months general waiting period and / or 12 month condition specific waiting period. No cover for Prescribed minimum Benefits.
Less than 24 months membership and less than 90 days break.	12 Month condition specific waiting period for new conditions. Balance of existing waiting period. Cover for Prescribed Minimum Benefits.
More than 24 months membership and less than 90 days break.	3 Month general waiting period. Cover for Prescribed Minimum Benefits.
Is change of scheme due to change of employment with less than 90 days break?	No new general waiting periods. No new condition specific waiting periods. May impose balance of unexpired waiting periods.
If the change is due to employer changing or terminating scheme; or Application being made within 90 days of terminating from previous scheme; or Application made within a reasonable period before start of financial year; or Membership to commence at beginning of year.	No new general waiting periods. No new condition specific waiting periods. New scheme may impose balance of unexpired waiting periods.

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3. Prescribed Minimum Benefits

The Minister of Health has stipulated that every registered medical scheme must cover their members for certain conditions referred to as Prescribed Minimum Benefits or PMB’s. There are approximately 270 conditions and their suggested treatment set out in Annexure A of the Regulations. Over and above the 270 Prescribed Minimum Benefits there are also 26 chronic conditions that medical schemes must provide treatment for.

Prescribed Minimum Benefits must be obtained from a service provide stipulated by the scheme otherwise a co-payment of 25% or the difference in cost must be paid by the member. However, if the service is involuntarily obtained by a provider other than the designated service provider (DSP) the co-payment will not apply. These conditions are:- The service was not offered by the designated service provider; or it could not be offered without unreasonable delay; Immediate treatment was required under circumstances or at a location where the member was unable to receive treatment from a designated service provider; There was no designated service provider within a reasonable distance to the member’s home or place of work.

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4. Children and Babies

Babies should be registered within 30 days of birth. However, no conditions may be imposed on any child on a specific scheme if they were born while the main member was on the scheme and the main member does not have broken membership from the date of the birth of the child to the date the application was made.

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5. Dependants

The Act briefly defines dependants as a spouse, partner, dependant child or other members of the member’s immediate family who the member cares for and supports. Also, any other person who under the rules of a medical scheme, is recognized as a dependant of the member and is eligible for benefits under the rules of a medical scheme.

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6. Comprehensive Cover versus Hospital Cover

Comprehensive cover offers extensive hospital cover as well as day-to-day benefits (e.g. doctors, dentists, specialists etc.) Hospital cover only offers cover for a procedure or condition that requires a person to be hospitalised, any out of hospital expenses such as glasses, dentists etc. are not covered. We would always recommend a member take comprehensive cover if at all possible.

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7. Savings

Previously a member could select the amount of savings they wanted to contribute, up to 25% of the contribution. A couple of years ago legislation changed and now the amount allocated to savings on each scheme is pre-determined. It is still capped at a maximum of 25% of the total gross contribution.

If a member leaves a scheme to join another scheme which has a medical savings benefit the funds must be transferred to that scheme. If the fund does not have a savings benefit or the member is not joining a medical scheme their funds can be paid out. According to the Income Tax Act as the member received a deduction in respect of contributions money reimbursed would constitute a recoupment of deducted contributions.

Money in the savings portion may only be used to pay for health services and may not be used for any costs relating to Prescribed Minimum Benefits (PMB’s).

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8. Thresholds

Most queries directed to medical schemes and brokers are regarding thresholds and self-payment gaps.

On certain schemes a threshold requires members to pay for certain day-to-day benefits (doctors, dentists etc.), out of their own pockets, once the savings portion is exhausted, until a certain limit known as a threshold is reached. Thereafter the scheme will continue to cover the costs of the medical services received at the schemes predetermined rate. It is important to remember that not all schemes have an above threshold benefit. On some schemes once the personal medical savings account is depleted all day-to-day costs will be for the members account.

There are certain factors which many members are not aware of that increase the self-payment gap and even in some cases make the above threshold benefit almost impossible to reach, some of these factors are:

• Over the counter medication. One may purchase medication over the counter without a doctor’s prescription, this will be paid for provided there is medical savings available, however, this purchase will not accrue to the threshold leaving a potential self-payment gap before the above threshold benefit is reached.

E.g. A member has a savings account of R200 and they purchase over the counter medication to the value of R200, the pharmacy receives payment from the medical scheme of R200 and the member has no savings left. The member then goes to the doctor who charges R300, as the member has no savings left the they will have to pay the first R200 of the account and the balance of the bill will come out of the above threshold benefit.

If the same member purchased over the counter medication for R200, and the medication was paid from the savings account and the scheme had a self-payment gap of R500 before the above threshold benefit was reached, the member then went to a doctor who charged R300 the full amount of R300 would come out of the member’s pocket as well as the additional R200 to make up the R500 self-payment gap before the member was above threshold.

• If a claim is reimbursed at private rates as opposed to medical aid rates, the provider (doctor, dentist etc.) will be paid at the private rate but only the medical aid rate will accrue to the threshold. E.g. A doctor charges R300, the medical aid rate is R200, the doctor will be paid R300 but only R200 will accrue towards the threshold leaving a potential self-payment gap of approximately R100.

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9. Pre-Authorisation

All medical schemes require members to phone and get pre-authorisation before being admitted to hospital for any procedure.

In the case of an emergency a member would need to make sure they have pre-authorisation the first working day after being admitted to hospital. Failing to pre-authorise could result in a claim being refused and / or paid at a lower rate.

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10. Tax Deductions

Tax payers 65 and older may claim all qualifying expenditure.

Taxpayers under 65 are not taxed on, or may deduct, monthly contributions to medical schemes up to R720 for each of the first two dependants on their medical scheme and R440 for each additional dependant. In addition they can claim a deduction for medical scheme contributions above the capped amount and any other medical expenses limited to the amount which exceeds 7.5% of taxable income.

Taxpayers under 65 may claim all qualifying edical expenses, where the taxpayer or the taxpayer’s spouse or child is a handicapped person.

Some of the companies we represent are:

Discovery
Momentum Health
Profmed
Bonitas
Liberty Health
Oxygen
Resolution
Fedhealth
Medscheme

Some abbreviations or terms that may be useful:

PMB’s - Prescribed Minimum Benefits.
DSP’s - Designated Service Providers.
PMSA - Personal Medical Savings Account.
CDL - Chronic Disease List.
GP - General Practitioner (Doctor).
ATB - Above Threshold Benefit.
CDA - Chronic Drug Amount.
MMB - Major Medical Benefit.
NRPL - National Regulated Price List.

Click here to open our Medical Aid Quotation Form

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