The act which governs all medical aid companies is called “The Medical Schemes Control Act No 131 of 1998.” This act came into effect in February 1998.

Functions of the Council of Medical Schemes

1. To protect all consumers
2. To make sure medical aid companies are solvent at all times.
3. To investigate complaints and settle disputes.
4. To co-ordinate the functioning of medical schemes in relation to national health policy
5. To investigate all information regarding private health care in South Africa.
6. To apply rules to medical schemes to make sure they comply with the law.
7. To make recommendations to the minister regarding medical schemes.

Purpose of a Medical Scheme (Medical Scheme is a medical aid company)

Firstly there seems to be a confusion regarding medical aid companies. To clear up this confusion is easy. Any medical aid company must be registered with the Council of Medical Schemes. The other “Medical aid” is not registered therefore it is not a medical aid it is a short term insurance product.

Medical aid companies basically provide financial assistance to us as clients. Clients pay a monthly contribution to a fund. Imagine 1 000 000 people paying towards this fund. When we become ill, money is paid out of this fund to the hospital and/or treating doctors in hospital. Medical schemes negotiate cost with various hospitals/ medi-clinics, doctors etc. The reason why they negotiate is to keep the cost of medical expenses low which would keep the fund protected from being depleted. The law does however state that medical aid companies must invest part of every contribution a member makes into an account. This money cannot be touched as it needs to compensate for members just in case a medical aid company does not manage their risk pool well.

Two types of Medical Schemes

  1. Commercial – This is called an open scheme. Open to the general public
  2. Restricted – This medical scheme is closed to the public. In other words is owned by a company. Your company takes out a medical aid for you. You must be employed with the company or be a pensioner.

Rules of applying for Medical Aid

  1. All medical aid companies must accept you.
  2. A medical aid company cannot discriminate against any person including race, gender, marital status, ethnic or social origin, sexual orientation, disability, pregnancy and state of health past or present.
  3. The register of medical schemes will not register a medical scheme unless provisions is made for the following  medical scheme rules.
  4. Medical aid must continue if a person retires, if employment is terminated on account of age, ill-health or other disabilities the dependants on the medical aid.
  5. Prescribe minimum benefits (PMB) – Every medical scheme must offer prescribe minimum benefits to               members. The Council of Medical Schemes issues a list to medical schemes which needs to be covered without any limits. Example of PMB’s High Blood pressure, Diabetes, cholesterol, epilepsy, heart disease etc
    The reason why the council enforced PMB’s is to reduce the state having to pay for this cost. Even though the law states that medical aid companies must pay in full for PMB’s.
  6. The only factors which a medical scheme can impose on you is a late joiner penalty, 12 month existing condition exclusion and/or a 3 month exclusion. We will look at this in detail a bit later.

MSA (Medical Savings Account) or PSA (Personal Savings Account)

This is added to certain medical aid plans. The law does not allow medical aid companies to change more than 25% of your medical aid premiums to savings. Assuming your hospital plan premiums is R1000 per month, you cannot have more than R250 being paid into your savings account. Your total premiums forward the medical aid would be R1250 per month. This will give you R3000 savings you can spend on anything out of hospital. If you do not use the full R3000 between January and December, this money gets carried over to the next year. The only way to get paid out the full balance of the savings is to use it for medical expenses or if you cancel your medical aid.

Penalties which can apply when joining a medical aid

1. Late joiner penalty

Members over the age of 35 who have not contributed towards a medical aid will be charged a late joiner penalty. The reasons why this penalty is charged is to discourage people from waiting until they are unhealthy and old before they join a medical scheme. If only old and unhealthy people join a medical aid, the fund could be depleted quite fast. Not to mention medical aid would become unaffordable. Therefore the young and healthy, subsidize the old and sickly.

A late joiner penalty is only applied to a specific person and not to the entire family on the medical aid. You cannot charge the late joiner penalty to a savings portion only the hospital plan premium. Late joiner penalties is charged from the age of 35. So depending on how long you have not contributed to a South African medical aid will determine the penalty.

Years Maximum Penalty
1 – 4 years 5%
5 – 14 years 25%
15 – 24 Years 50%
25 + years 75%

Eg. Assuming you are 65 years old and have not contributed to a South African medical aid, the calculation is as follows:

65 years old – 36 = 30 years off a medical aid. This means that you will be charged 75% of the hospital plan premiums as a penalty.

2. General Waiting period

This is a three month general waiting period. In other words, you cannot claim within the 3 months from inception of the application. Only on the fourth month can you claim.

3. Condition specific waiting period

This is for members who have an existing medical condition. It does not need to be a serious medical condition for a medical aid company to exclude this condition for 12 months.

When will a Medical aid company apply these medical conditions?

1. If you had no previous medical aid or had more than 90 days without medical aid, the following conditions will be applied to your application

  • 3 month general waiting period
  • 12 month condition specific waiting period
  • Late joiner penalty
  • PMB is also excluded for 12 months

2. If you had less than 2 years cover but applied for medical aid within the 90 days from termination of previous             medical aid, the following conditions will apply:

  • No 3 month waiting period
  • Condition specific waiting period
  • Balance of previous waiting periods
  • Late joiner penalty
  • Qualify to claim for PMB

3. If you belonged to a medical aid for 2 years or longer, applied within 90 days from termination, the following conditions applies:

  • 3 month general waiting period
  • No 12 month condition specific exclusion
  • Late joiner penalty
  • Qualify to claim for PMB