The truth about your MEDICAL SCHEME
Your medical scheme is making killer profits.
Let’s take a look at Discovery, South Africa’s largest medical scheme, with more than 2.7 million beneficiaries at the end of 2016. If you read the business news regularly, you’ll know that the profits of Discovery Health (Pty) Ltd run into the billions.
But wait a second, that’s not the medical scheme, that’s the financial services provider. It’s all a bit confusing, isn’t it? The thing is, medical schemes are not for profit. Some do their administration themselves, while others outsource it. Besides Discovery Health, other companies that administer medical schemes but are separate from them include Metropolitan Health Corporate, Medscheme Holdings and Momentum Medical Scheme Administrators.
Medical schemes are, however, required by law to be ‘financially sound’. This means they have to be able to honour the benefits they offer members, which are laid out in their rules. (Did you ever read those? You should have been given a free copy detailing your rights and obligations when you joined.)
The schemes are tightly regulated by the Medical Schemes Act and must register with the Council for Medical Schemes (CMS), which protects beneficiaries and tries to ensure that the schemes are accessible and fairly managed. According to the Act, schemes have to have funds of at least 25% of gross annual contributions in reserve, and this is monitored by the CMS.
You’re paying in more than you get out.
In 2015, the average amount spent on contributions per adult beneficiary per month was R1439,80. About
37,1% of that was spent on hospital expenses. In contrast, the monthly healthcare spend by the schemes was R1319,20. Even if you feel you’re getting a raw deal, just one short hospital stay will make it worthwhile.
You can save if you join a medical scheme only when you need it.
You could join when you know you’ll need medical cover – such as when you’re planning a pregnancy or need an operation – but that goes against one of the functions of medical schemes: members cross-subsidise one another. When you’re healthy (usually when you’re younger), your contributions offset the increased medical expenses of less healthy fellow members – but, some day, someone else will be offsetting your expenses.
Although the Medical Schemes Act doesn’t compel everyone to belong to a medical scheme, it does allow schemes to penalise you if you aren’t in from the get-go. Waiting periods can be applied, which means you pay contributions without being able to claim any benefits. If you haven’t been a member of any scheme in the 90 days leading up to your application, you and your dependants will have to wait for three months before you can make a claim. If you have a specific medical condition, including pregnancy, you’ll have to wait for 12 months before you can submit any claims relating to it.
These waiting periods even apply to conditions on the Prescribed Minimum Benefits (PMB) list, though the scheme might waive this for childbirth itself. (We’ll get to PMB later.)
If you were previously a member of a scheme, there are still waiting periods depending on the duration of your membership, but to a lesser degree than if you were never a member. If you change schemes because you’ve changed jobs, you won’t be subjected to waiting periods.
If you still reckon you’d be willing to roll with the waiting periods, then perhaps you’ll be less keen on opting out of membership in the light of late-joiner penalties. If you decide to join a scheme for the first time when you’re older than 35, you’ll have an ongoing penalty slapped onto your monthly contribution. The amount is determined by a formula, which takes your age above 35 and any years of membership into account. Let’s say you decide to join at 40 and you’ve never been part of any medical scheme, your surcharge will be 25% of the usual contribution. The older you get, and the less time you’ve been with a medical scheme, the greater the percentage. Did you spend time out of the country? Perhaps you had medical insurance? Sorry, but that doesn’t count. Only membership of a medical scheme in SA offsets the late-joiner penalty.
When you apply for membership you can be refused if you’re older or unhealthy.
Medical schemes are legally obliged to accept you – open enrolment is written into the Act. This is for open schemes, of course. Restricted schemes are for specific groups of employees or professionals; for example, GEMS is for government employees only and Profmed is for professionals who meet the eligibility criteria, one of which is a qualification of four years or more.
Age, gender, current or past ill health, and the frequency of healthcare have no effect on your application. Those factors don’t affect the contribution you pay either. It’s nothing like insurance cover, where you are rated based on your risk factors and your premium is loaded accordingly. The only things that affect your medical scheme are the number of dependants, and possibly your income. Children or adult dependants may be charged less than the principal member.
There are a few conditions, though: your membership could be refused or cancelled if you fail to disclose relevant information about your or your dependants’ health; if you don’t pay your contributions within the time allowed in the medical scheme’s rules; or if you submit fraudulent claims.
Your employer has no right to make membership of a medical scheme compulsory.
As part of the conditions of your employment, your employer can dictate that you belong to a specific medical scheme. The only way out is usually if you’re an adult dependant on your partner’s scheme.
If you get cancer, your scheme should cover all your treatment costs.
In a case brought to the CMS, a woman diagnosed with cancer needed an antibody, Herceptin, to treat it. A year’s supply would cost more than R550000, but the rules of her medical scheme limited funding to R200000. The case turned into a battle through the CMS, which initially agreed with the medical scheme but then agreed with the woman on appeal, before once again agreeing with the scheme on final appeal.
This is the way it usually goes, which is a bitter pill to swallow if you or someone you love gets cancer. But the limits to benefits are set out in the rules and the scheme has to maintain its ability to cover as many members as possible. So scrutinise those rules.
The only medical expenses covered on a hospital plan are those you run up when you’re actually in hospital.
Medical schemes are obliged to cover any emergency medical condition, a specific set of about 270 conditions called the Diagnosis and Treatment Pairs (DTPs), and the 27 conditions on the Chronic Disease list – on every
benefit option. These are called the Prescribed Minimum Benefits (PMB) and their diagnosis and treatment must be funded in full. Yet, according to its most recent annual report, the CMS resolved 1050 complaints concerning short-payment of PMB accounts and 322 non-payments. The only exceptions to the obligation are when you choose not to use a designated service provider (DSP), use medication that isn’t on the formulary, fail to get pre-authorisation or apply the treatment protocols set out in the scheme rules.
If you used a non-DSP for your PMB because you had no choice – perhaps the DSP was unavailable or too far away when you needed urgent treatment – your medical scheme is obliged to pay in full.
Examples of chronic diseases on the list include hypertension, type 1 and type 2 diabetes, asthma, bipolar mood disorder, HIV, hypothyroidism, rheumatoid arthritis and coronary artery disease. The DTPs include pregnancy, which is the most expensive. Treatable breast cancer and pneumonia also fall into this category.
Co-payments on a PMB can come out of your medical savings account.
This is specifically disallowed by the Act. The idea behind co-payments is to reduce fraudulent or unnecessary claims – which push up contributions.
Medication for any chronic condition, such as high blood pressure or diabetes, is paid out of your savings.
Your medical savings account is for health services that don’t fall into the category of PMBs.
If you don’t use all your savings, you can get the cash back.
At the end of each financial year, whatever you have left in your medical savings account goes towards your expenses the next year.
If you change medical schemes or options, your savings funds are transferred to the new one. If you switch to a scheme without a savings account or you don’t join another scheme, your savings will be paid out to you but they could be taxed.
Healthcare providers always charge more than your medical scheme covers.
SOME DO SOME DON’T
The CMS publishes the National Health Reference Price List to guide schemes and service providers on appropriate charges. Some healthcare providers charge medical scheme rates, so their account will be settled in full.
However, private healthcare isn’t subject to price regulation – the price list is just a guide – so healthcare providers can, and often do, charge amounts far in excess of the medical scheme rates, and you’ll have to pay the difference. If you’re feeling the pinch, you’ll save a mint by seeking out healthcare providers that stick to the scheme rates.
You can change options only at the beginning of the year.
Your medical scheme can rule that you can change your benefit option only at the beginning of each year after giving three months’ notice. But if you’re struggling to pay your contributions and want to drop to a reduced benefit option, find out if this rule applies.
For free medical care, just show up at an emergency unit.
(if it really is an emergency) Despite the hospital’s attempts to check whether you’re ‘good’ for payment while you’re in anaphylactic shock, it is obliged to treat you whether you can pay or not. So what counts as an emergency? Here’s the acid test: if you aren’t treated there and then, it would result in death, or damage or dysfunction of an organ or part of the body. If it’s not an emergency, your scheme doesn’t have to pay.
If your medical scheme refuses to pay a claim, there’s nothing you can do about it.
You can query it, unless you’ve been tardy. If you submit an account for medical expenses after four months, it won’t be paid. For other disputes, you can lodge a complaint with your scheme. If you’re not happy with the outcome, you can take your complaint to the CMS. Visit www.medicalschemes.com/Content. aspx?110 to find out how.
Med ClaimAssist looks into whether medical-aid non-payment is legitimate or not, for a flat fee of R349 plus VAT. Go to medclaimassist.co.za for more information.