"The circular proposes extensive changes, which are still under debate by healthcare stakeholders, however, the early announcement provides employers with enough time to adequately amend their healthcare policies," says Andre Jacobs, Regional Manager Healthcare for Aon South Africa.

Minimum benefits at fixed contribution rate

Advertisement

Some of the changes proposed include the introduction of a common set of benefits, which includes the current, prescribed minimum benefits that schemes are required to provide, at a single contribution rate, which will be known as "the medical scheme risk contribution".

However, in addition to the common benefits, medical schemes will be entitled to offer a fixed number of supplementary options, for which a supplementary benefit risk-contribution will be calculated.

The medical schemes' non-healthcare expenses (administration costs, broker fees and managed care costs for providing the common benefits) will be separated from the cost of providing healthcare benefits and will have to be disclosed as a flat Rand contribution for all beneficiaries. Non-healthcare expenditure related to supplementary benefits will have to be quoted as a separate contribution. The medical scheme will be required to create separate reserves that cover shortfalls in contributions.

A flat contribution rate will be charged for the principal member, adult dependant and first child dependant - and medical schemes are only allowed to charge for the first child dependant, regardless of the number of children on the scheme.

Advantages of networks emphasised
The advantages of hospital group or doctor networks are emphasised in this circular, with medical schemes permitted to offer different contribution rates for the common or supplementary benefit packages if members choose to use healthcare providers from the network.

Jacobs advises employers to look closely at their existing healthcare policies, questioning whether medical schemes should be compulsory or voluntary and how they should be structured. They should also ensure that the schemes will be able to stand up to the impending changes in the healthcare environment, such as the introduction of the Low Income Medical Scheme, the Risk Equalization Fund and the Prescribed Minimum Benefit Package.

Employers should check viability
"Employers should ask which medical schemes will be most appropriate to absorb all these changes and remain viable to afford adequate benefits at affordable contributions?" says Jacobs.

It is likely that the introduction of the proposed minimum benefit package will create gaps in healthcare cover. How will these gaps be filled? Will health insurance products be used? How will the legal compliance of these products be evaluated? How will these products be integrated with the health policy and strategy of the employer? “Medical schemes with a larger membership base will have the economy of scale advantage in negotiating better rates with preferred providers on benefits included in their options. Contributions for Principal Member, Adult dependant and child dependant to be exactly the same could increase the cost for entry level options,” according to independent medical researcher, Johan van Tonder. “Singles and larger families will be subsidised by small families. Adults claim more on average than children, especially for hospital benefits. More research should be done before finally deciding on prices,” he added.

"Employers should ensure that their employees are prepared and informed of the possible benefit changes and the impact the changes will have on the employees' individual healthcare risks," says Jacobs.

"Healthcare policies should be closely scrutinized to make sure they can absorb the changes without unnecessary negative impact on their healthcare strategy. Aon has developed a healthcare audit that will assist employers who wish to evaluate their healthcare policy," concludes Jacobs.

(Based on a press release on behalf of AON by Cathy Findley Public Relations)
 

Print this article

Rate this article Poor 1 2 3 4 5 Excellent

JOBS

Senior Secretary Gauteng - North/Sandton Infrastructure Resource Gauteng - Johannesburg Management Accountant R450,000-500,000 Per Annum Cost To Company Gauteng - Johannesburg Financial Manager R350,000-400,000 Per Annum Cost To Company Gauteng - Johannesburg Financial and Project Accountant R300,000-360,000 Per Annum Cost To Company Gauteng - Johannesburg Financial Accountant R380,000-420,000 Per Annum Cost To Company Gauteng - Johannesburg SSIS Business Intelligence Specialists (SSIS; SSAS) R350,000-500,000 Per Annum Cost To Company Gauteng - North/Sandton Financial Accountant R350,000-450,000 Per Annum Cost To Company Gauteng - South Find more jobs Register your CV Post a job