Joining a medical scheme in a crisis
By law you cannot be refused membership of an open medical scheme; however, schemes can impose restrictions and/or penalties to mitigate their risks. In the absence of these restrictions and penalties, people could join and leave medical schemes at whim, when they felt the need for cover or not. This would place a far heavier burden on the membership of a scheme as a whole, and would make contributions unaffordable.
There are two ways medical schemes are permitted to counter this practice, which is known as anti-selection. They can impose “late-joiner” penalties on people who have not belonged to a medical scheme before or who have let more than three months pass between leaving one scheme and joining another; and they can impose a “waiting period”, during which you may not claim.
Sandy van Dijl, health branch manager at Alexander Forbes, says the Medical Schemes Act allows schemes to apply a late-joiner penalty when you join a scheme after the age of 35 or when you have had a break in cover for more than three months.
Van Dijl says medical schemes would consider an applicant a late joiner if the applicant:
* Is 35 years or older;
* Was not a member or a dependant of a registered South African medical scheme on or before April 1, 2001 (“Cover outside of South Africa is not accepted as previous medical scheme cover,” she says); and
* Has allowed a break in membership of a registered scheme of more than three consecutive months since April 1, 2001.
Van Dijl says: “The late-joiner penalty is calculated taking into consideration the number of years you had cover with a registered South African medical scheme since the age of 35. This penalty is added onto your monthly contribution and remains with you for life.
It is important to note that any cover you may have had under the age of 21 is excluded.
The penalty is applied based on the risk contribution payable to the medical scheme; it is not applied to any savings component of the monthly contribution.”
The penalties, based on the number of years without cover after the age of 35, are:
* 1 to 4 years: 5% of risk contribution;
* 5 to 14 years: 25% of risk contribution;
* 15 to 24 years: 50% of risk contribution; and
* 25 years or more: 75% of risk contribution.
The formula used to calculate the penalty is your current age (on the date of registration) minus 35 plus the number of years of previous cover with a registered scheme.
For example, your age on the date of registration is 58 years.
You previously belonged to a medical scheme for 12 years.
The number of years you were not a member of a scheme since the age of 35 is: 58 - 35 + 12 = 11 years. Therefore, the penalty will be 25%.
Van Dijl says that to avoid these penalties you should avoid buying medical scheme cover only when you are older or when you need it.
“It is important to have medical scheme cover in place not only when the need arises, but also for emergencies. Treatment for any severe illness or medical emergency can be very costly.”
Research published in the South African Medical Journal in January last year showed that, at a central public-sector hospital, the cost of intensive care was almost R23 000 a day.
Van Dijl says although upper-tier medical scheme options may be expensive, you may find lower-tier options more affordable.
“Members must also be aware that hospital cash plans, insurance products, foreign medical cover and cover under the age of 21 are not recognised as previous medical scheme cover,” she says.
Medical schemes may also apply certain waiting periods over and above a late-joiner penalty, on application. This is an initial period of membership during which you may not claim. The waiting periods you may be exposed to are:
* A three-month general waiting period; and
* A 12-month pre-existing condition-specific waiting period.
“These waiting periods will be determined by the medical scheme at time of joining, but are dependent on the previous medical scheme cover you have had, how long you have had cover and if you have or have not had a break in membership prior to joining,” Van Dijl says.
Access to the prescribed minimum benefits (PMBs) - a set of life-threatening conditions that all medical schemes must cover on risk benefits - will also be determined by the medical scheme on application. Access to PMBs is also affected by previous medical scheme cover, duration of cover and any breaks in membership.