Health Insurance is not (as good as) Medical Aid

Health Insurance is not a medical scheme and the cover is not the same as that of a medical scheme. The policy is not a substitute for a medical scheme membership but, healthcare comes at a cost that a lot of people can’t afford. So, if you cannot afford Medical Aid or a Hospital Plan with a Medical Scheme, you can look at Health Insurance for some quality, affordability and accessibility that may result and assist in “Quality Healthcare for All”.

Most Health Insurance companies are an exempt medical insurance, fully compliant with the Demarcation Regulations. Governed by the short-term insurance and long-term insurance as well as still reporting to the council of medical schemes.

The Council for Medical Schemes (CMS) regulates the medical schemes industry in a fair and transparent manner and achieves this by: protecting the public and informing them about their rights, obligations and other matters, in respect of medical schemes; ensuring that complaints raised by members of the public are handled appropriately and speedily; ensuring that all entities conducting the business of medical schemes, and other regulated entities, comply with the Medical Schemes Act; ensuring the improved management and governance of medical schemes; advising the Minister of Health about appropriate regulatory and policy interventions that will assist in attaining national health policy objectives; and ensuring collaboration with other entities in executing its regulatory mandate.

The Council's strategic objectives are to ensure that: access to good quality medical scheme cover is promoted; medical schemes and related regulated entities are properly governed, responsive to the environment, and beneficiaries are informed and protected; the CMS is responsive to the environment by being a fair, transparent, effective and efficient organisation; and the CMS provides strategic advice to influence and support the development and implementation of national health policy.

The definition of ‘business of a medical scheme’ in the Medical Schemes Act 1998 makes it clear that if you charge a premium or contribution for undertaking liability for providing a health service, for granting assistance in defraying the costs of a health service or to render a health service in association with a medical scheme, you will need to be registered as a medical scheme under the Medical Schemes Act.

The Long-term Insurance Act and the Short-term Insurance Act have new definitions of a ‘health policy’ and an ‘accident and health policy’ which prohibits any insurance policy which does the business of a medical scheme (pays medical expenses) unless it fits within the demarcation regulations.

The demarcation regulations has special categories of insurance including gap cover (with Annual Limits), non-medical expense cover as a result of hospitalisation, testing and treatment of HIV/AIDS, TB & malaria, international travel insurance, medical emergency cover and frail-care assistance (long-term policy only).

The proposed conditions on health insurance products, as outlined below, is to ensure that the design, marketing and sale of health insurance policies do not undermine the social solidarity principles in medical schemes, while at the same time serving the needs of those who require additional protection against health-related risks:

  1. Prohibition on health insurance policies from discriminating against any person on the grounds of age, gender and other criteria;
  2. Enhanced product disclosure/marketing requirements;
  3. Alignment of broker commission between health insurance and medical scheme products;
  4. Enhanced regulatory reporting and monitoring;
  5. Product standards which limit policy benefits; and
  6. Limitations on bundled type health insurance products which replicate medical schemes.

Health Insurance In Conclusion

The demarcation between health insurance and medical schemes has a long history, going back as far as 2000 after the enactment of the Medical Schemes Act no. 131 of 1998.

The basis of the demarcation debate was the fact that certain health insurance products were deemed to infringe on and compete unfairly with medical schemes, without being subject to the same regulatory requirements.

This culminated into various versions of draft regulations for health insurance products to ensure a clearer role of each product while remaining competitive and educating consumers on the complementary role of such products in their health portfolio.

The final Demarcation Regulations (DR) was signed into law on 23 December 2016, with all new policies having to comply from 1 April 2017. Existing policies had to comply after 1 January 2018.

Finally, don't forget the Tax Credit from SARS if you have cover with a Medical Scheme instead of Medical Insurance!! https://www.sars.gov.za/types-of-tax/personal-income-tax/medical-credits/

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