Medical gap-cover insurance and hospital cash plan benefits will be limited and top-up cover will be banned from January next year, while primary healthcare plans will be obliged to register as medical schemes by April 2019.

This follows the publishing by Finance Minister Pravin Gordhan, in consultation with Health Minister Dr Aaron Motsoaledi, of the final demarcation regulations under the Long and Short Term Insurance Acts late in December.

The regulations aim to demarcate the business of a medical scheme from a health insurance policy and ensure that insurance products do not undermine critical cross-subsidisation within schemes.

The final demarcation regulations, which followed two earlier drafts and four years of consultation, were published for comment in October. National Treasury received comments from Day 1 Health, which provides primary healthcare and hospital cash plan policies, stating that the consultation process was flawed, and the regulations were illegal and irrational.

National Treasury said it did not agree with Day 1’s submission.

The regulations take effect on April 1, and the amended definition of a medical scheme, which effectively bans healthcare policies other than the exceptions provided for in the regulations, will also become effective on that date.

New health insurance policies issued from April 1 will have to comply with the regulations, while existing policies will have to comply from January next year.

The regulations limit insurers to offering hospital cash plans with benefits of up to R3 000 a day or a lump sum of R20 000 a year and gap-cover policies with annual benefits up to R150 000.

Gap-cover policies cover the shortfall between what a scheme pays and what a doctor charges for a procedure.