As mentioned above, medical scheme products are usually made up of two funding pools:<\/p>\n “Insured risk is the money collected from all members to pay for collective benefits across all scheme products for the entire membership and forms part of the total monthly contribution if you\u2019re on a product that has a Medical Savings Account (MSA),” said CMP.<\/p>\n If you are on a hospital plan or only have hospital cover, it forms the total monthly contribution, as these products don\u2019t have a savings component.<\/p>\n The savings funding pool portion of the total monthly contribution is only available in certain products and is created by individual money that can be used to fund almost any medically-related expense a member chooses, except for PMBs.<\/p>\n Medical schemes, unlike companies, do not operate for profit, noted CMP.<\/p>\n “Simply put, medical schemes are a collection of people who agree to a set of rules for the payment of certain benefits in return for a contribution which has to be paid monthly,” said CMP.<\/p>\n “As a result, all medical schemes are registered as Section 21, not-for-profit entities.”<\/p>\n Contributions are increased mainly due to the continuous price increases implemented by hospitals and specialists as a result of the rise in medical inflation and the lack of regulation regarding what they can charge.<\/p>\n Benefits, on the other hand, are what you are covered for on your chosen product and they are in return for your monthly contributions.<\/p>\n The Medical Schemes Act prohibits schemes from cross-subsidising between products. However, cross-subsidisation within a product is allowed, said CMP.<\/p>\n This begs the question:\u00a0if certain members are clearly subsidising some of their fellow members, why can\u2019t members from other products that the scheme offers, cross-subsidise the members of a product with lower contribution s- especially with those that have similar benefits?<\/p>\n “Not only is it against the law, if such a degree of cross-subsidisation were to take place, the product could become unstable,” said CMP.<\/p>\n “This would happen due to incorrect contribution levels for the product being subsidised. Every product offered by a scheme must be self-funding and therefore, the scheme may not knowingly allow one product to cross-subsidise another for the year ahead.”<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2017\/01\/Medicine.jpg\")
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\nContributions\u00a0<\/strong><\/h3>\n
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\nWho else are you subsidising?<\/strong><\/h3>\n
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\nA careful balance<\/strong><\/h3>\n