How new health cover reg­u­la­tions af­fect you

The new reg­u­la­tions af­fect con­sumers with gap cover in­sur­ance, pri­mary health­care poli­cies and hos­pi­tal plans. re­ports PRI­MARY HEALTH­CARE POLI­CIES

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Reg­u­la­tions con­cern­ing your choice of health in­sur­ance prod­ucts, the ben­e­fits they of­fer, and the con­sumer-pro­tec­tion mea­sures to which they must ad­here, came into ef­fect at the be­gin­ning of April. If you’re us­ing these prod­ucts, ei­ther as a sub­sti­tute for med­i­cal scheme cover or to sup­ple­ment it, or are look­ing at us­ing them, you need to know what has changed and the type of prod­ucts that are now avail­able.

The reg­u­la­tions un­der the Long Term and Short Term In­sur­ance Acts, known as the de­mar­ca­tion reg­u­la­tions, were in­sti­tuted in an ef­fort to forge a clear bound­ary be­tween med­i­cal scheme cover, which is gov­erned by the Med­i­cal Schemes Act, and other types of health in­sur­ance, which are gov­erned by the two in­sur­ance Acts.

Cer­tain types of in­sur­ance poli­cies that su­per­fi­cially re­sem­bled med­i­cal scheme cover will be phased out.

The rea­sons for the reg­u­la­tions are twofold:

• They make sure you, as a con­sumer, are bet­ter in­formed of the dif­fer­ences be­tween health in­sur­ance and med­i­cal scheme cover; and

• They en­sure that the cross-sub­sidi­s­a­tion within med­i­cal schemes be­tween healthy and sick mem­bers, which is crit­i­cal for schemes’ well-be­ing, is not un­der­mined.

All new health poli­cies have had to com­ply with the new re­quire­ments since April 1. Ex­ist­ing longterm in­sur­ance poli­cies will have to align to the reg­u­la­tions as and when such con­tracts are changed or re­newed. Ex­ist­ing short-term in­sur­ance poli­cies will have to align by Jan­uary 1 next year.

Short- term ac­ci­dent poli­cies, which pay out if you are in­jured in an ac­ci­dent (and which are not cov­ered in this ar­ti­cle), will also have to align to the reg­u­la­tions.

Prod­uct providers are obliged to com­mu­ni­cate clearly to you that health in­sur­ance poli­cies, par­tic­u­larly hos­pi­tal cash plans, are not a sub­sti­tute for med­i­cal scheme mem­ber­ship.

Roseanne Mur­phy Har­ris, the pres­i­dent of the Ac­tu­ar­ial So­ci­ety of South Africa, says the reg­u­la­tions were much needed.

“Con­fu­sion over the ben­e­fits of­fered by health in­sur­ance poli­cies ver­sus med­i­cal schemes has un­for­tu­nately re­sulted in con­sumers in­ad­ver­tently sac­ri­fic­ing ad­e­quate med­i­cal cover by opt­ing for prod­ucts not ap­pro­pri­ate for their cir­cum­stances. This con­fu­sion also re­strained med­i­cal schemes from de­vel­op­ing a broader and more sus­tain­able mem­ber­ship pool, which is crucial for the fi­nan­cial well-be­ing of schemes.”

These views are echoed by Gerhard van Em­me­nis, the act­ing Pri­mary health­care poli­cies of­fer a lim­ited range of health­care ben­e­fits, such as vis­its to gen­eral prac­ti­tion­ers and emer­gency med­i­cal care. Be­cause they are con­sid­ered to per­form the busi­ness of a med­i­cal scheme, these prod­ucts will be phased out.

“How­ever, in­sur­ers are able to ap­ply for a two-year ex­emp­tion un­der the reg­u­la­tions in or­der to pro­tect the rights of pol­i­cy­hold­ers, as these poli­cies tar­get low­in­come earn­ers,” Roseanne Mur­phy Har­ris says. prin­ci­pal of­fi­cer of Boni­tas Med­i­cal Fund: “We wel­come the de­mar­ca­tion, as it is de­signed to pro­tect con­sumers and will as­sist in sta­bil­is­ing the med­i­cal schemes in­dus­try. The de­mar­ca­tion will fur­ther aid in clear­ing the mis-per­cep­tion that ex­ists be­tween health in­sur­ance prod­ucts and med­i­cal schemes.”

The main types of health poli­cies af­fected are:

• which is used to sup­ple­ment med­i­cal scheme cover. It makes up the dif­fer­ence be­tween what your scheme pays out for hos­pi­tal­i­sa­tion and in-hos­pi­tal spe­cial­ists and what hos­pi­tals and spe­cial­ists ac­tu­ally charge.

• which are of­ten taken out by peo­ple who can’t af­ford med­i­cal scheme cover but need some sort of cover for health­care ex­penses. These poli­cies pay out a fixed amount per day for each day you are in hos­pi­tal.

• which are poli­cies from in­sur­ers that re­sem­ble ba­sic med­i­cal scheme cover, pay­ing for cer­tain med­i­cal con­sul­ta­tions and pro­ce­dures. These will be phased out over the next two years while the Depart­ment of Health and Na­tional Trea­sury look at ways of in­te­grat­ing them into the med­i­cal scheme frame­work as low­cost med­i­cal scheme op­tions.

Van Em­me­nis says you need to re­mem­ber that health in­sur­ance prod­ucts are sold by in­sur­ance com­pa­nies, which are for-profit or­gan­i­sa­tions. Med­i­cal schemes, on the other hand, are non-profit (al­though the ad­min­is­tra­tors of such schemes are for-profit).

Also, in­sur­ance con­tri­bu­tions are not tax- de­ductible, whereas you re­ceive tax cred­its for med­i­cal scheme con­tri­bu­tions.

Med­i­cal scheme cover out­weighs what you get from a short-term in­sur­ance pol­icy, Mur­phy Har­ris says. It helps you to pay for a com­pre­hen­sive range of health­care needs and ex­penses, of­fer­ing dif­fer­ent lev­els of ben­e­fit op­tions.

It also pro­vides guar­an­teed pre­scribed min­i­mum ben­e­fits, which pro­vide for full cover for treat­ment in med­i­cal emer­gen­cies, 270 life-threat­en­ing con­di­tions and 25 com­mon chronic con­di­tions.

martin.hesse@inl.co.za

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