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
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
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
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:
- 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
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.
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
- Pap smears, breast examinations
via ultrasound and Prostate Specific Antigen screening
- Pneumococcal and influenza
- 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
from the Council for Medical Schemes and Alexander Forbes Technical and
Actuarial Consulting Solutions)
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