New laws come into effect on 1 April 2017 that govern the health insurance industry. Here we will look at how the health insurance laws work.
These regulations are to make a clear boundary between medical scheme cover and other types of health insurance.
The reasons for these new regulations are:
- Ensure the consumer knows about the differences between medical scheme cover and health insurance
- Ensure consumers choose appropriate products for their circumstances and have adequate medical cover wherever possible
- To ensure that the subsidisation of sick members by healthy members within medical aids is not undermined (they need sufficient members to ensure the health of their schemes)
The new regulations affect both short-term and long-term insurance products. Providers of health insurance also have to communicate clearly to their members that their products are not a substitute for medical aid membership.
The most affected policies include:
Gap Cover: – How the Health Insurance Laws Work
This is cover that makes up the difference between what your scheme pays and what is actually charged
- Cover limited to R150000 per person per year
- Limit aims to stop healthcare providers increasing their fees based on insurance pay-outs
Hospital Cash plans:
These policies pay a fixed daily amount for hospital stays
- Limited to pay up to R3000 per day in a hospital up to a maximum of R20000 per year
- Regulations stipulate benefits should have payment after two days in a hospital and calculated from the first day
Primary Healthcare Policies: – How the Health Insurance Laws Work
These are policies that resemble medical scheme cover and will be phased out or integrated into the medical scheme framework
- These will phase out, although insurers can apply for a two-year exemption to protect the policyholders, who are generally low-income earners.
A key difference between medical schemes and medical insurance products is that medical schemes are non-profit and insurance companies are for-profit organisations. Also, insurance contributions are not tax-deductible while you can earn tax credits for contributions to a medical scheme.
Most experts say that medical scheme cover is preferable because it provides:
- Cover for a comprehensive range of healthcare needs and expenses
- Guaranteed prescribed minimum benefits (full cover for treatment in medical emergencies, 25 chronic conditions and 270 life-threatening conditions)
In order to address some of the concerns, the new regulations include the following:
- Commission payable to insurance brokers limited
- Insurers may not discriminate against individuals because of their health, pregnancy or disability; however, they may price premiums on the age of the policyholder at the start of the contract (provided this rule is for uniformly to all)
- Insurers may have a waiting period of up to three months before new policyholders can submit a claim (or up to 12 months for specific conditions)
Disclose all terms, premiums and restrictions when you take the policy out.