What you need to know when joining a medical aid
Deciding on the right medical aid can be extremely confusing. Not only are there more benefit options that you can shake a stick at, but there are also specific regulatory criteria to bear in mind, not to mention all the jargon.
Luckily, going forward this year you’ll be in the know. Whether you looking to join a medical aid or simply reviewing the various terms and conditions, here are a few things that you need to know:
Medical Aid schemes are instructed by law to accept anyone who applies for membership. For this reason, older and more sickly members are allowed to join even if they haven’t contributed to the risk pool. To contest the risk, medical schemes can impose waiting periods. A waiting period works like a probation, where you pay the monthly contributions but you will not be entitled to any benefits for a specified time upon joining.
There are two types of waiting periods - a general period of up to 3 months, and a pre-existing condition waiting period of up to 12 months. Waiting periods can apply in the following cases:
If you have not been a member of a South African medical scheme for the past 90 days or longer prior to applying for memberships
If you voluntarily change medical schemes and have not been on your previous scheme for a period of two years or more
There is only one exception to this rule. When it comes to Prescribed Minimum Benefits, a Scheme may not refuse treatment in the waiting period unless the member never belonged to a Scheme or did not belong to a Scheme for atleast 90 days prior to the date on which they applied for membership.
Late joiner penalty
A late joiner penalty is another way for medical aid schemes to combat the increased risk of new members joining the scheme without having previously contributed to the risk pool. The Medical Schemes Act makes provision for schemes to apply a late joiner penalty to members who are older than 35 years of age and who were not members of a medical aid scheme before 1 April 2001.
The late joiner penalty will be added to your monthly contribution and does not expire after a certain amount of time as is the case with waiting periods. The penalties are imposed indefinitely.
How is the late joiner penalty calculated?
Your age upon application minus (35 + years covered previously) = the number of years the applicant was not covered.
A percentage is used to calculate the penalty:
- 0 - 4 years uncovered: 5% of total contribution
- 5 - 14 years uncovered: 25% of total contribution
- 15 - 24 years uncovered: 50% of total contribution
- 25 years or more uncovered: 75% of total contribution
What are Prescribed Minimum Benefits (PMB)?
PMB is a defined list of benefits/treatments for which all medical aid schemes in South Africa have to provide cover in terms of the Medical Aid Schemes Act, regardless of the benefit option you have selected.
Medical aid schemes have to cover the costs related to the diagnosis, treatment and care of:
- Any life-threatening emergency medical condition
- A limited set of 270 medical conditions
- 25 chronic conditions
The purpose of a medical aid serves to protect members financially if they suddenly have to pay large, unexpected medical costs. Without medical aid, you might have to rely on state healthcare facilities or pay for financially crippling medical treatment out of your own pocket.
Now that you know more about the waiting period, late joiner penalty, and PMB, you can make an informed decision when choosing a medical aid plan. Keep in mind that if you want to switch plans within your current medical aid scheme, you must ensure that you apply for the switch within the specified time period allowed in accordance with your medical aid scheme rules.