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Until recently the costs of medical scheme membership has been high – partially driven by the high cost of private medical care, but also by legislation, which required schemes to cover certain prescribed minimum benefits (PMBs).
According to the Medical Schemes Act of 1998, all schemes and hospital plans had to cover 270 PMBs, which included 25 chronic conditions. Even on hospital plans, schemes had to cover the cost of chronic medication for their members.
Low-cost medical insurance products
It has proved difficult for schemes to introduce low-cost options while these regulations were enforced, which have birth to low-cost medical insurance products, such as hospital cash-back plans. These plans were not governed by the regulations of the Medical Schemes Act, and could therefore offer low-cost options, which didn’t pay for medical procedures, but rather for time spent in hospital, regardless of the treatment a patient had undergone.
Read: Medical Schemes Act: proposed amendments to PMBs
Medical schemes rely on cross-subsidisation of young and healthy members for older and sicker members, and the low-cost medical insurance products have tended to lure away the younger members, putting the medical schemes industry at risk in the long run. In closed schemes, such as employer-run schemes, medical scheme membership is often compulsory, and there is a large pool of young and healthy members – which is not the case in many open schemes.
In the second week of September the Medical Schemes Council published a framework outlining the new requirements according to which existing medical schemes could apply to have new low-cost options registered.
Here are the main things you need to know about the new regulations for low-cost benefit options (LCBOs) and how they could affect you:
Who qualifies?
- Only people who earn less per annum than the income-tax threshold (which is currently R70 700 for people below the age of 65) will qualify for membership.
- Membership can be restricted based on income as mentioned above, and on geographical regions and within employer groups.
What is different about these LCBOs?
- Brokers may earn more than 3% of commission on these (this is to encourage brokers not just to recommend high-cost options because of commission rates).
- The LCBOs may exclude all in-hospital benefits and require members to make use of state hospitals for all procedures.
- The schemes will focus on preventative care, primary care and management of chronic and acute conditions.
- They will only have to cover 15 of the 28 conditions on the Chronic Disease List.
- Members will be restricted to using network providers in order to lower costs.
- There may be no co-payments or deductibles for the benefits prescribed in the minimum benefit package.
- Late joiner penalties may not be applied (currently, late joiner penalties may be as high as 75% of the contribution), but certain waiting periods can.
- The cost of membership could be as low as R200 – R500 per month for a single member, with child dependents paying about half of the adult contribution.
What will be offered to members on these LCBO?
Here’s a short summary of the benefit package from Alexander Forbes:
- Five network consultations and 1 out-of-network consultation at a GP, nurse, pharmacy or clinic
- Pre- and post-natal care within the GP, nurse, pharmacy or clinic network
- Cholesterol, blood glucose and blood pressure tests in high risk groups
- HIV counselling and testing, TB screening
- Pap smears, breast examinations via ultrasound and Prostate Specific Antigen screening
- Pneumococcal and influenza vaccines
- A limited benefit for acute medication further limited to an essential drug list
- Chronic medication for 15 chronic conditions limited to an essential drug list
- A specified list of 53 pathology tests and 68 x-rays and four ultrasounds
- One eye test and one pair of single vision spectacles every 24 months
- Two consultations for basic dentistry, limited to a list of 25 procedures
- Emergency road transportation
(Information from the Council for Medical Schemes and Alexander Forbes Technical and Actuarial Consulting Solutions)
Read more:
What will happen if PMBs are charged at medical aid rates?
SA medical schemes in favour of improving clinical quality healthcare
Do you know which claims your medical scheme doesn't have to pay?
