The amnesty period for late joiners of medical schemes comes to an end on March 31, with those failing to meet the cut-off date running the risk of   paying much higher premiums after they join.

The Medical Schemes Act 1998, permits medical schemes to impose penalties on persons who join a medical scheme later in life – whether as a member or a dependant of a member. This measure was instituted to protect medical schemes from “adverse selection”. In other words, late joiners of schemes are penalised in order to discourage people from waiting until they are old or sickly before joining a medical scheme, and then making large claims against medical schemes when they have only been contributing to the medical scheme for a short time.

Ideally, people should start contributing to medical schemes at a time when they are still young and healthy. Director General at the national Department of Health, Dr Ayanda Ntsaluba said that in a society like South Africa with high unemployment and no prospect of significant short-term expansion of resources, it was important to create a situation where people who wanted to take responsibility for their own healthcare, were able to do so.

He said it was in the interest of the State to encourage people to join, as they would inevitably fall back on the State if they did not have access to medical scheme support.

Aspects of the Act such as community rating of premiums, non-cancellability of membership, and guaranteed acceptance are all intended to improve access to medical schemes cover for the elderly and sick.

The greater the number of years after the age of 30 that a person was not a member of a medical scheme, or a dependant of a member, the higher the contribution payable by that member, when he/she decides to join a medical scheme.

The maximum penalties are calculated as follows:

• 5 to 9 years not a member of a medical scheme after age 30 – 1,05 x contribution  
• 10 to 19 years – 1,25 x contribution ? 20 to 29 years – 1,5 x contribution  
• 30+ years – 1,75 x contribution

For example, the premium for a member of a particular medical scheme may be R1 500 per month. If a 60-year old person who has never before been a member of a medical scheme, joins that medical scheme before 31 March, he/she will pay the ordinary premium of R1 500 per month. If he/she delays joining until after 31 March, the scheme may require him/her to pay 1,75% x R1 500 per month. S/he could end up paying R2 625 per month instead of R1 500.

Patrick Masobe of the Council for Medical Schemes said up to now they had managed to improve access to healthcare as well as the quality of care and to gradually improve the solvency of medical schemes.  

He said the amnesty period has been incorporated to ensure that everyone gained access and to discourage people from acting in an opportunistic manner.

“There needed to be a strong incentive to join early,” said Masobe, who also said that penalties were a worldwide practice.

The Act and its accompanying regulations have three main components:

• The introduction of measures that ensure that access to basic medical scheme cover is not limited by age or ill health;    
• The introduction of a minimum package of essential hospital benefits which   all medical schemes have to cover (this will be revised continually);
• Improving the oversight, governance and financial stability of medical schemes.

 The Act is important in the light of the 1999 SA Health Review which reveals that over 60 percent of health care resources in South Africa are consumed by the private health sector to serve between 20 to 25 percent of all South Africans.

The majority of health care providers also work in the private sector. In 1998, 62 percent of general practitioners, 77 percent of specialists, 88 percent of pharmacists and 89 percent of dentists worked in the private sector.

Nearly half of all nurses (43%) were working in the private sector in 1998. In 1997, there were about 166 000 hospital beds in South Africa. Close to 30 percent of these beds were in the private sector. Anyone with queries can contact the Council for Medical Schemes at (012) 431-0500.