Medical Aid Waiting Periods And Late-Joiner Penalties: What. How. Why.
There are strict rules and regulations governing the medical aid industry, there to protect both the members and the financial sustainability of the schemes.
Gerhard Van Emmenis, Principal Officer of Bonitas Medical Fund, discusses some of the important membership rules and regulations.
What are waiting periods?
According to the Medical Schemes Act, medical aid schemes are entitled to impose waiting periods: A 3 month general waiting period and/or a condition-specific of up to 12 months.
Unlike other financial products, medical schemes are regulated, not-for-profit entities to ensure they fulfil a social solidarity role, ie everyone benefits from the dependence individuals have on each other.
When do waiting periods apply?
Waiting periods generally apply if: You or your dependants were not on a medical aid for a period of at least 90 days before you join; you have never been a member of a medical aid or you chose to move from one medical aid to another.
Can waiting periods be waivered?
Yes there are circumstances under which waiting periods can be waivered. While waiting periods are set out in the Medical Schemes Act, underwriting is based on specific scheme criteria. Which is why it’s always best to contact your medical scheme for information on waivers.
Are PMBs covered during the waiting period?
A Prescribed Minimum Benefit (PMB) is a common, life-threatening chronic condition for which cost-effective treatment would sustain and improve the quality of the member’s life. There are 27 PMB conditions and by law, the medical scheme has to cover the diagnosis, treatment and management of these. This can be confusing when waiting periods are imposed.
Van Emmenis explains, ‘Pre-existing conditions are not simple. There are a series of questions which are asked and factors taken into account when determining when to implement waiting periods. Underwriting is very much based on individual needs. If a potential member is concerned they can request pre-underwriting from a scheme and engage on a one-on-one basis.’
What is a late-joiner penalty?
In South Africa, schemes can impose late-joiner penalties on individuals who join after the age of 35; those who have never been medical aid members, or those who have not belonged to a medical aid for a specified period of time since April 2001. The reasoning for this is to ensure fairness (whereby members who have been part of a scheme for years are not subsidising newer members who have not contributed to the scheme).
Does the loading reduce over time?
Unfortunately not, once you are paying a loaded premium, it remains in place.
Upgrading from a hospital plan
If someone has been on a hospital plan but decides to move to a medical aid and is over the age of 35, a loading will still apply.
Age and infirmity
Late-joiner penalties have been put in place to compensate for potentially increased claims by people who join a medical aid scheme when they’re already older or infirm and range from 25% of contributions to 75%. These penalties are imposed at the discretion of a scheme and apply to all types of medical aid plans, including hospital plans.
Can you move directly from a hospital insurance to medical aid?
Even though hospital plans are now governed by the Medical Schemes Act and not as previously by the Financial Services Board, late-joiner penalties apply if you move from a hospital insurance to any form of medical aid (including a hospital plan).
Can you change your membership any time during the year, is there a penalty for doing this and/or a waiting period?
Yes you can change at any time (but usually this happens during open period with new contracts coming into place from the beginning of a new year). Waiting periods are not usually imposed unless for pre-existing conditions however, the savings allocated to a plan may be. Savings are allocated in advance for 12 months so, if you leave during the year and have used more than the appropriate portion of savings, you will have to pay this back.
What if you change from one Scheme to another?
A 3-month waiting period will more than likely apply as well as limited PMB cover and a late-joiner penalties.
‘I’d encourage people to compare policies across schemes before making a final decision about their medical aid future. ‘ says Van Emmenis. ‘Our health is important and it makes sense to do some homework to see what is being offered, whether the plan provides the benefits you and your family needs, what will be paid from risk and the savings allocation and then weigh this up against the monthly premium.’
For more information on the options available from Bonitas, you can visit: www.bonitas.co.za.