What is underwriting?
When joining any open medical scheme in South Africa, the medical scheme has the right (in reference to the Medical Schemes Act of South Africa No. 131 of 1998) to implement underwriting on any member joining that scheme.
This underwriting entails the following:
- 3 Month General Waiting period excluding PMB cover.
- 3 Month General Waiting period including PMB cover.
- 12 Month Condition-specific Waiting period.
- Late Joiner Penalty (LJP)
Description of specific underwriting:
3 Month General Waiting period excluding PMB cover:
This is a period in which the member cannot claim for any benefits from the medical scheme and is applicable from the members start date. Once this period has passed, the member will be covered in full (except for any pre-existing condition which received a 12 Month Condition-specific Waiting period) and according to the scheme rules and benefit option.
3 Month General Waiting period including PMB cover:
This is a period in which the member cannot claim for any benefits from the medical scheme and is applicable from the members start date. The member will however be covered for LIFE THREATENING emergencies and conditions as covered within the Prescribed Minimum Benefits (PMB). This includes cover for the 26 PMB Chronic conditions. Once this period has passed, the member will be covered in full (except for any pre-existing condition which received a 12 Month Condition-specific Waiting period) and according to the scheme’s rules and benefit option.
12 Month Condition-specific Waiting period:
This is a period during which a beneficiary is not entitled to claim benefits in respect of a specific condition for which medical advice, diagnosis, care or treatment was recommended or received within a 12 month period prior to the member’s start date. This means that any existing medical condition (cholesterol, diabetes, back problems etc.) will be excluded for 12 month’s from start date of the membership. No medical scheme claim linked directly to the condition will be paid for within the 12 month’s.
Late Joiner Penalty (LJP):
This is a penalty (financial) that can be implemented on all members, over the age of 35. The penalty is only calculated on the Risk portion of the total monthly premium and is paid every month for as long as you are a member. To avoid such penalty, you have to provide the scheme with proof of previous medical scheme membership through a sworn affidavit or membership certificates.
How the penalty is calculated:
They take your current age and deduct the total amount of years you have been a member on a medical scheme. They only calculate years and not month’s. The amount must be 35 or less to avoid a penalty.
Example: If you are 50 years old and have belonged to a medical scheme before (Liberty 10 years, Discovery three years), deduct 13 from 50 = 37. Your LJP will be 5% – see table below.
Adjusted age: LJP
36 – 39 5%
40 – 49 25%
50 – 59 50%
60+ 75%
When will or won’t underwriting be applicable?
3 Month Waiting Periods:
If you are currently a member of a medical scheme and have been for a continuous period of less than two years and you join a new scheme within 90 days of resigning from your current scheme, a three-month waiting period may not be implemented.
When you have been retrenched or you are going on retirement and you were on your company’s closed medical scheme (like Wooltru, Polmed, Sasolmed, Bankmed, etc.) with no option to continue on that medical scheme and you then join an open scheme (Fedhealth, Medihelp, Discovery, etc.), that scheme cannot implement a three-month waiting period.
3 Month General Waiting period excluding PMB cover:
This waiting period can be implemented on all members joining a medical scheme for the first time ever and on members that are joining after a break of more than 90 days from resigning from their previous medical scheme. This means that for the first 3 month’s you will not have any cover and should anything happen, you will have to make use of state facilities for medical treatment.
3 Month General Waiting period including PMB cover:
This waiting period can be implemented on all members joining a medical scheme who have been a member of a medical scheme continuously for more than two years and who joins a new scheme within 90 days of resigning from their previous scheme.
12 Month Condition-specific Waiting period:
When you have been retrenched or you are going on retirement and you were on your company’s closed medical scheme (like Wooltru, Polmed, Sasolmed, Bankmed, etc.) with no option to continue on that medical scheme and you then join an open scheme (Fedhealth, Medihelp, Discovery, etc.), that scheme cannot implement a 12 Month Condition-specific waiting period.
A 12 Month Condition-specific waiting period can be implemented on the following basis:
- If you are joining a medical scheme for the first time and you have any pre-existing conditions (pregnancy, cancer, kidney problems, etc.) or you make use of any chronic medication, a 12 Month Conditions-specific waiting period will apply.
- If you have been a member of a medical scheme continuously for two years or less and you join a new scheme within 90 days of resigning from your current scheme, a 12 Month Condition-specific waiting period can be implemented, except in respect of any treatment or diagnostic procedures covered within the Prescribed Minimum Benefits (PMB).
- If you have been a member of a medical scheme continuously for two years or less and your current scheme did implemented a 12 Month Condition-specific waiting period, but at the time of resignation that 12 Month Condition-specific waiting period had not expired yet, the new scheme you are joining (within 90 days of resigning from your current scheme) can continue to implement the remaining month’s of the 12 Month Condition-specific waiting period.
- A medical scheme cannot implement a 3 Month or a 12 Month Condition-specific waiting period on a member who changes from one benefit option to another within the same medical scheme, except if that member is subject to a waiting period on their current benefit option. In such case, any remaining period may be applied and continued on the new scheme.
- A medical scheme cannot impose a 3 Month or a 12 Month Condition-specific waiting period on a child-dependant whom is born during the period of membership. Please do keep in mind that the child dependant must be registered on the medical scheme within 30 days from date of birth.
A medical scheme cannot impose a 3 Month or a 12 Month Condition-specific waiting period on a person who makes an application to join a medical scheme within 90 days from resigning from their current scheme, due to the following circumstances:
Change of employment (meaning that it is compulsory to join your new employers medical scheme). Your employer changes or terminates the current scheme, effective from the new financial year. The employer however has to provide the medical scheme with reasonable notice of this change.
Exception: If the member currently has a waiting period on their current benefit option and it has not expired at the time of changing to the new medical scheme, the remaining period may be applied and continued on the new scheme.
Late Joiner Penalty (LJP):
A medical scheme cannot implement a Late Joiner Penalty on any member over the age of 35 who has been a continuous member of a medical scheme prior to the 1st April 2001 without a break in coverage of more than 90 days.
Example: If you are 65 years old, currently on a medical scheme and you have been continuously, (this can be more than one scheme) from the 1st March 2001 (or prior to this date), without a break in coverage of more than 90 days between the scheme memberships, the new scheme you are joining cannot implement a Late Joiner Penalty.