Consider all options before cancelling your medical cover
“Medical scheme contributions are certainly one of the biggest monthly budgeted expenses for most households,” says Zee Gumede, senior healthcare consultant at financial advisory firm GTC.
“Members may be looking for opportunities to cut or reduce this expense. They may want to know how this will affect their benefit levels, how quickly changes can be made and what would happen if they have to cancel their medical scheme cover altogether, hopefully with the option to rejoin at a later stage, once finances allow.”
Medical schemes are entitled to cancel or suspend membership if you fail to pay your contributions within the time allowed in the medical scheme’s rules. However, a Council for Medical Schemes (CMS) circular released on March 26 addresses non-payment of contributions under current crisis conditions. It asks that all schemes, “in the spirit of social solidarity as outlined by the president during his address to the nation on Monday, March 23, 2020, investigate all disruptions to member contributions on a case-by-case basis and determine the merits thereof, prior to termination”.
A subsequent circular, released last week, details guidelines proposed by the CMS after consultation with schemes, to assist both schemes and their members. After all, if a scheme is not receiving contributions, it affects its liquidity and ability to pay claims, which are likely to be higher than usual if Covid-19 cases escalate.
The guidelines were drawn up on the assumption that the lockdown will not last more than three months. The circular noted that the current levels of scheme reserves were estimated at R60 billion. It said any consideration to utilise scheme reserves to address the negative financial impacts of coronavirus could be justified only if it benefited medical scheme members.
Weighing relief measures for members against safeguarding the liquidity of schemes, the CMS said it could not consider a blanket contribution holiday, where members’ contributions were waived and the loss was funded from reserves.
However, measures that schemes would be permitted to take to assist members were:
* Using savings in members’ medical savings accounts to offset contributions.
* Granting ex-gratia payments or loans to members to offset contributions.
The circular also stated that the CMS had lodged a draft regulation with the minister of health for the treatment of Covid-19 to fall within the prescribed minimum benefits (PMBs) – benefits for life-threatening conditions that schemes must fully fund from your risk cover.
Gumede says if you are battling to keep up with your contributions and have no other options open to you, you may, depending on the rules of your scheme or emergency measures they may have in place, change from a non-network to a network plan, or downgrade your plan to one that offers fewer benefits.
“If all options discussed are still unaffordable, then cancelling your medical scheme cover will be the only option,” says Gumede.
“Members will need to provide the scheme with one month’s notice, and any amount of savings which has been used in excess of the pro-rata amount at the date of cancellation must be repaid to your medical scheme.”
She says it is critical, however, you reinstate your medical scheme cover within three months.
“Reinstating your medical scheme plan requires a declaration of health, confirming your current health status. Also, the scheme may impose a three-month general waiting period, during which only PMB cover will be available.”
Gumede warns if you reinstate your cover outside of three months, additional condition-specific waiting periods may be imposed for up to 12 months.
“Making a decision to cancel your medical cover during this health crisis will have a major impact on safeguarding your health and well-being. It should not be taken lightly and all options should be carefully discussed with a healthcare consultant before any life-altering decisions are made,” she says.