Warning to anyone who doesn’t have medical aid in South Africa

South Africans who choose to be without medical aid or think they will just join later in life when they need it, will face significant penalties and costs for joining late.

Following Discovery’s interim results in March, Group CEO and founder Adrian Gore expressed concern over the lack of young people with medical aid and the trajectory of medical aid inflation.

He explained that the group’s Discovery Health Medical Scheme (DHMS) has seen the average age of its members rise from 32.3 years in 2008 to almost 38 in 2024.

Gore highlighted that this was due to an increasing trend of young people dropping medical aid while they were still healthy.

He added that this increased the age profile of schemes and consequently burdened them with a disproportionate number of chronic illness claims, driving up medical aid prices above inflation.

While financial constraints were a factor, it also noted ‘egalitarian’ medical aid rules as an issue.

“The fact that people can move in and out of the system at will means young people often stay out of the system and get in later in life,” he said.

Gore added that stricter rules must be implemented, with bigger penalties for people joining medical aid schemes later in life.

By doing this, Gore said medical schemes would be able to cover the illnesses of older members while keeping medical aid increases lower.

Bonitas found similar patterns and noted financial concerns and a younger person’s “mindset” as reasons for the decline in young members of medical aid schemes.

Bonitas’s Principal Officer, Lee Callakoppen, told BusinessTech that the average age of Bonitas beneficiaries is 35.9, similar to that recorded by Discovery.

Besides affordability, Callakoppen noted the other reason for young South Africans’ low uptake in cover is “the younger person’s mindset,” which is that if you’re young and healthy, you don’t need medical aid.

However, Discovery and Bonitas warned of the financial consequences of holding back from medical aid. 

They explained that coverage would be significantly more expensive as they get older, any major injuries could become financially crippling. 

To address the affordability aspect, both companies highlighted efforts to introduce more affordable plans to address the cost barrier for young South Africans.

Discovery Health CEO Ron Whelan told BusinessTech that Discovery Health Medical Scheme offers plans designed with the healthcare and affordability needs of younger individuals in mind.

Callakoppen noted Bonitas’ new and affordable options, such as their Edge plans, which are aimed at economically active singles or couples.

All these products from either Discovery or Bonitas cost anywhere from as little as R1,100 to R1,500 per month. 

A warning for those without cover

Waiting too long to join a medical scheme could cost people dearly later in life, when late joiner penalties can significantly increase their monthly medical aid contributions.

This is the warning from Michael Emery, Marketing Executive at Ambledown Financial Services, who stressed that South Africans should join a medical scheme as soon as they start working and before age 35.

Emery agreed with the providers and said that many young South Africans opt not to join a medical scheme because they are in good health or cannot afford medical scheme membership. 

However, neglecting to do so can prove costly as they become older and are at greater risk of illness. 

“Starting early is an investment in the future of your health, and as important as retirement savings,” he said.

“If they wait too long to join a medical scheme, their contributions will be significantly higher because they present a greater risk to the scheme.”

Emery added that medical scheme late joiner fees and waiting periods are designed to prevent misuse of the medical scheme system.

It also protects the medical scheme members who have been within the system for many years.

Emery noted that late joiner fees and waiting periods could be considered discriminatory in some way, but they’re not. 

“They’re there to protect the people who’ve been contributing to the healthcare fund for many years, from those who may try to exit and enter the healthcare system as and when they need to,” he said. 

“If people join a medical scheme only once they know they will need medical treatment, it presents a greater risk to the scheme and pushes the premiums up artificially.”

He added that late joiners who have had no cover for many years are also at greater risk of having health issues that were not diagnosed or managed adequately for years.  

Emery explained that medical schemes calculate late joiner penalties based on the individual’s age when joining the scheme and the number of years they have not been a member.

“The penalty is generally a percentage of the base contribution rate, and could add as much as 75% to the monthly medical aid contribution.” 

Emery said that the high cost of medical scheme contributions can deter many South Africans from investing in their health.

However, he stressed that numerous entry-level medical schemes and insurance products are available, such as those mentioned by Discovery Health and Bonitas. 

Emery urged young South Africans and others without a medical aid scheme to consider these to avoid the consequences later in life.