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

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