The regulations which govern the Medical Schemes Act come into effect on November 1, 1999. By January 1, next year, all medical schemes and health insurers will have to comply. Esann de Kock looks at what this will mean for you.
The regulations are part of the government`s strategic plan to re-regulate
the healthcare industry; to relieve the burden on the public sector and to
encourage people who can afford it, to take out private health cover, in an
environment where their own interests, as well as the interests of their
schemes, can be protected.
The main points you should take note of are:
Open access
* What it is:
This means no medical scheme or health insurer may exclude anyone from being
a member of the scheme or from buying the product. In the past, particularly
older people and sick people were discriminated against because they were
likely to cost the scheme more money due to the fact that they would
probably use up more benefits and institute more claims.
* How it will affect you:
If you are in a position to choose which medical scheme you want to belong
to, in other words, if it is not compulsory for you to belong to your
employer`s medical scheme, or if you are, say, self employed, you can
approach any scheme on the market and it will have to accept you as a
member. The only membership provision will be your ability to pay the
membership fees. No medical condition - whether it be diabetes or Aids, or
if you have had a kidney transplant - will disqualify you from becoming a
member of a medical scheme or a health insurance scheme.
Community rating
* What it is:
Everyone who wants to join a medical scheme or health insurance scheme has
to be allowed to pay the same price for their membership. The only criteria
that can be used to determine your membership fee are your income and/or
your number of dependents.
* How it will affect you:
If a scheme decides to use income as the determining factor, and you are 25
years old, you will pay the same contribution as someone who is 90 years
old - provided both of you earn the same amount of money or have the same
income.
The same rule applies if your scheme decides to use dependents as the
determining factor.
All members with one dependant will pay the same rate. However, the
regulations do allow for different rates for adult and child dependents.
The reason for this is that the industry raised concern over the fact that
single-parent families may end up cross-subsidising other members of the
scheme, if a distinction was not made.
Minimum benefits
* What it is:
All medical schemes will have to provide their members with a certain
minimum level of healthcare benefits.
These benefits will effectively cover those services that are offered in
public hospitals.
* How it will affect you:
Adrian Baskir, of Old Mutual Healthcare, says most medical schemes that
offer comprehensive cover, will already meet most of the minimum benefit
package requirements.
However, he says, some will have to extend their benefits in respect of
certain conditions covered by the minimum benefits, such as mental illness,
organ transplants, HIV and Aids.
Baskir says your scheme will have to start managing the impact of Aids,
because the regulations state that all hospital admissions for
HIV-associated diseases should be covered by your scheme. Previous draft
regulations linked the admission to blood cell counts. The Department of
Health also specifically mentions that the protocols for the medical
management of HIV/Aids will be reviewed.
Personal savings accounts
* What it is:
This provision in the regulations states that personal savings accounts will
continue to be allowed, subject to a maximum of 25 percent of total
contributions.
* How it will affect you:
Medical savings accounts are part of what are known as new generation-type
products, where a certain portion of your monthly membership contribution
goes into a pool, which covers you for expensive treatment, such as
admission to a hospital.
A smaller percentage goes into a savings account, of which you are in charge
and which you can use, as you like, for day-to-day needs, such as visiting
your doctor.
The key to this is that the savings account acts as a form of self-insurance
and is aimed at encouraging you to think twice before you spend, because
whatever you don`t spend, you can carry over to the next year.
Baskir says since some medical schemes currently channel as much as half of
contributions into savings accounts, the new limit of 25 percent will lead
to changes in benefit design.
However, members of schemes that offer savings accounts will still enjoy the
benefits of these accounts.
Waiting periods
* What it is:
Although no scheme can deny anyone access, schemes may impose waiting
periods on you if you are not in good health. They can also exclude you from
receiving cover for certain pre-existing conditions.
* How it will affect you:
If you are not in good health, a scheme may approve your membership and you
can start paying premiums, but you can be made to wait for a while before
you are allowed to make use of any of the benefits you have already bought.
Where a medical scheme decides to exclude you from receiving benefits for a
pre-existing condition from which you may suffer, the scheme will state the
nature of the exclusion on your benefit cards. Baskir says this could create
considerable discomfort for you in terms of confidentiality.
Premium penalties
* What it is:
Guaranteed access to schemes may result in some concern with medical schemes
and their members, insofar as the schemes may face a heavy financial burden,
should many people only decide to join the scheme late in their lives.
To try to prevent this, the regulations allow schemes to impose late-joiner
penalties, for those entering the scheme over the age of 35.
* How it will affect you:
If you are not a member of a medical scheme and are about 35 years old, you
may want to join soon, to avoid being penalised. The penalties will be
implemented on the basis of how many years you were not a member of a
medical scheme after age 30.
If you are not a member of a scheme and aged between 35 and 39, you will pay
a maximum penalty of 1,05 times your annual contribution; if you were not a
member of a scheme for between 10 and 19 years after you turned 30, you will
pay a maximum penalty of 1,25 percent times your contribution; if you have
not been a member of a scheme for 20 to 29 years after your 30th birthday,
your maximum penalty will be 1,5 times your contribution; and if you were
not a member of a medical scheme for 30 years after your 30th birthday, you
can be charged a maximum penalty of 1,75 percent of your medical scheme
contributions.
Against this background, it is very important that you hold on to any
records which prove your medical scheme membership at any stage in your
life. If you are about to leave your employer and you belonged to the
company medical scheme, ask for a letter which states for how many years you
were a member. And if you have been a member of medical schemes on and off
over the past years; are 35 years or older and want to apply for new
membership of a scheme, try and get proof of your previous membership of
medical schemes to ensure your late-joiner penalty is as low as possible.
Finally, if you are not a member of a scheme and want to join, make use of
the six-month amnesty period - which begins on January 1 next year - during
which you will be able to join a scheme without incurring any penalty at
all.
Broker commissions and conditions
* What it is:
The regulations allow for the payment of commissions to all brokers who are
accredited by the Council for Medical Schemes, but a commission limit of
three percent of contributions a year, plus VAT, has been imposed.
Furthermore, the regulations state that any payment for longer than one year
must be disclosed to the Registrar of Medical Schemes.
And all intermediaries selling healthcare products must have at least a
Grade 12 educational qualification and a minimum of two years experience as
a broker or apprentice broker in the healthcare business.
Certification of brokers will be granted on an annual basis and will expire
on December 31 of every year.
* How it will affect you:
You will have better protection if you buy healthcare products from brokers.
However, you can go a long way to protecting yourself even further, by
asking to see the credentials and qualifications of your broker, before you
buy.