How medical aid regulations nail you for joining a scheme after turning 35

Health insurer Cape Medical Plan (CMP) has released a report detailing how the current laws surrounding medical aids penalise late-joiners.

According to the report, the law clearly states that late-joiners to medical schemes may be penalised, depending on proof of previous South African medical aid membership.

This means that anyone who is 35 years or older will be eligible to pay a late-joiner penalty fee, according to the underwriting guidelines in the Medical Schemes Act.

In addition, all of these late-joiner fees are permanent, said CMP.

How it’s calculated

“The penalty is calculated as a percentage of the applicant’s basic contribution, which excludes the savings component,” said CMP.

“It considers the applicant’s age and previous membership. The longer the applicant has been without medical aid, the higher the imposed penalty.”

“The penalty is then added to the contribution the member pays for insured benefits (hospital stays and chronic medication, for example) and not to the contribution to the medical savings account.”

The penalty applies to all types of medical aid plans, including hospital plans.

To determine the penalty, the following calculation is used:

  • Age upon application minus (35 years + years of previous cover) = total years uncovered.
  • Missed cover for up to four years attracts a 5% contribution penalty;
  • Five to 14 years missed has a 25% penalty;
  • 15 to 24 years gets a 50% penalty;
  • More than 25 years gets a 75% penalty.

So, for example, if you are 58 years old on the date of registration and belonged to another medical scheme for 12 years, the following late-joiner penalty would apply:

  • 58 – (35+12) = 11 uncovered years, which will result in a 25% late-joiner penalty.

According to CMP, if the applicant belonged to a South African scheme before, the penalty will be reduced – but the applicant will need to track down their membership certificates from previous schemes.

“Although tracking down these documents might sound simple enough, very few people keep paperwork that is older than five years, and the same goes for medical schemes,” it said.

“If you require your old medical scheme to produce your paperwork that is older than five years, this documentation is often stored off site, and will require someone to track them down in some warehouse, which becomes a tiresome and lengthy process.”

“This becomes even more complicated if you require paperwork from an old partner or a company you left. And if the medical scheme you belonged to no longer exists, this truly becomes a difficult task.”

Read: ANC wants your medical aid tax rebate to fund National Health Insurance

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How medical aid regulations nail you for joining a scheme after turning 35