In the last few articles of our Health Series, we have been looking at some of the basics around medical aid, medical insurance and gap cover.
In the next two articles, we will be going into a little more detail around the nitty gritty of medical aid and some of the technical terms that are frequently used which can sound a little intimidating.
Let’s get started! All open medical schemes are by law not allowed to refuse membership to anyone who is applying. Managing the risk can get tricky when people with different health risk profiles join to contribute towards a pool of funds.
How does one make it fair enough for everyone to benefit? This is where late joiner penalties and waiting periods comes in. We will be speaking about what they are and why they are implemented.
What are Late Joiner Penalties?
Late joiner penalties, in simple terms, are loadings or penalties added on top of your medical aid premium.
These price penalties are put in place by medical aid schemes to encourage younger people to join a medical scheme or penalize older people for waiting too long to join a scheme. The penalties can range between 5% and 75% extra on your premium.
Who are ‘late joiners’?
‘Late joiners’ are people who apply for medical aid after the age of 35. These are people who essentially have not had medical aid previously due to circumstance or choice and are now reaching an age where healthcare is becoming a need rather than a want.
The official definition of a ‘late joiner’ is someone who, at the date of application for membership:
- Is 35 years and older
- Has been without medical aid for a longer period than 3 months at a time since 1 April 2001
- Was not a member of one or more medical schemes before 1 April 2001
The definition is a bit technical but to break it down, medical schemes look at how long you have been part of one since the age of 35. Whether it’s as a member or dependent on a policy, they look if you’ve been off a scheme for longer than 3 consecutive months.
Every month that you have not been part of a scheme after the age of 35, adds up and determines the penalty amount they give you should you apply again later in life.
Why are ‘Late Joiners’ penalized?
To answer this question, you need to first understand one fundamental aspect of medical aid. Medical Aid is built around a basis of cross-subsidisation.
This means that younger and healthier members of a scheme, who ultimately claim less, subsidise the older members on a scheme – who generally claim more. So in essence, the younger generation covers the expensive costs of medication and treatments for the older generation and the cycle continues over time.
When a member who has ‘not played their part’ decides to join a medical scheme after the age of 35, they get penalized for not assisting the cycle. Late joiner penalties are also put in place so that people don’t wait till their health becomes a problem before applying for medical aid, it’s encouraged to have from a young age.
Here's an example:
Meet Elizabeth – a 47 year old accountant. Elizabeth was part of a medical aid for a period of 3 years from the age of 36-39 before leaving the scheme.
She has now decided to re-join a medical scheme as she would like to cover her healthcare expenses as they are getting more expensive.
Due to the fact that she was not part of a medical scheme for a total of 9 years, a late joiner penalty will be applied to her premium.
After a late joiner calculation is done, her premium will be loaded by 25% (this means a 25% increase on her premium for the duration of her membership).
Click here to find out how late joiner penalties are calculated or send us a message and we will gladly assist you.
What are Waiting Periods?
Waiting periods are periods during a membership where members have to continually pay their premiums, however they have no access to claim any benefits.
There are two types of waiting periods namely general waiting periods and condition-specific waiting periods.
General Waiting Periods
These waiting periods are put in place to protect schemes from members that join them and make large claims shortly after.
It prevents people from abusing the benefits of a scheme shortly after requiring medical attention.
The general waiting period is 3 months and is used most of the time unless the scheme has a concession available for a limited period.
Condition-Specific Waiting Periods
These waiting periods are imposed on applicants who join with pre-existing conditions.
These conditions such as: back problems, diabetes and asthma, will therefore be excluded from the list of benefits you are able to claim from during the period.
Condition-specific waiting periods usually last for 12 months from the start of the membership. It is important for applicants to mention any pre-existing conditions they might have, to avoid any implications of falsifying their information to evade the waiting periods.
Here's an example:
Meet Sindiswa – a 34 year old engineer. She was part of a medical scheme until the age of 27 when she decided to cancel her membership to save money.
She recently got diagnosed with type 2 diabetes and decided to join a medical scheme to help cover the costs of the treatment.
Due to the fact that this is a pre-existing condition, she will get a 3 month general waiting period. Plus a 12 month condition-specific waiting period for all diabetes-related benefits and claims.
Medical schemes have to find a way to balance the risk amongst all their members. The Medical Schemes Act allows them to make use of these strategies in order to make it fair for everyone that joins a medical scheme.
To find out more about medical aid or if you’re interested in joining, don’t hesitate to contact us for assistance. As an independent specialist, we can help find the best cover for you and your family.
Keep an eye out for our next article on the nitty gritty of medical aid, where we will be looking at prescribed minimum benefits and chronic conditions.
When you join a medical aid, you will get a 3-month general waiting period. This mean that you will not have access to any of your medical aid benefit within the first 3 months of membership.
A medical illness or injury that you have before joining the medical aid. Most medical aid will impose a 12-month general waiting period on the pre-existing condition.
Pre-authorisation is required should a member be admitted into hospital for a procedure. Please note that it is the members responsibility to ensure that they obtain authorisation from the medical aid.
