Medical Aid Payment Holidays During Lockdown

payment holiday

Many South Africans are experiencing financial hardship during the COVID-19 lockdown and have requested payment “holidays” from their medical aid providers.

Blanket payment holidays with full, continued benefits aren’t in the pipeline.

However, some medical aid schemes are offering relief to their members.

Payment holiday request denied by CMS

The Council for Medical Schemes (CMS), the regulatory body that oversees medical aid providers, has refused requests from several schemes to allow their members a blanket payment holiday.

This is because a blanket payment holiday would have extreme consequences on the legally required reserves – and solvency – of medical schemes, which would limit the ability of schemes to pay members’ claims.

Also, if a scheme allows a premium holiday, while having benefits met by the medical aid provider, there would be a deficit that, ultimately, would need to be met by very large premium increases in 2021.

Requests considered on a case-by-case basis

In an effort for schemes to be able to assist vulnerable members, the CMS has said individual requests for reduced contributions can be considered by schemes on a case-by-case basis.

Unfortunately, this is both legally and logistically difficult at the moment.

Firstly, schemes are only allowed to operate within the confines of their specific rules.

Secondly, many of the schemes’ administrators are working from home. As increasing numbers of members default on their payments, it’s impossible for staff to process this from their kitchen tables.

Use your savings to pay your contributions

What the council has allowed schemes to do – in an exemption from schemes’ registered rules – is let members with sufficient funds in their Medical Savings Account (MSA) use those savings to pay monthly contributions.

So far, not all schemes that have applied for this exemption have had a response to their request from the CMS.

What happens if you don’t pay your medical aid contribution?

Most medical aid schemes outline in their rules what happens if a member defaults on his or her monthly payment.

As an example, Discovery Health, South Africa’s largest scheme, has the right to suspend any benefits if contributions are unpaid or in arrears by three days.

If the contribution is unpaid after 14 days, membership may be cancelled entirely.

This is how the process works:

  • an unpaid premium results in the membership being suspended with no claims being paid
  • if the outstanding contribution is paid, the membership is unsuspended
  • unpaid claims during the suspension period are reprocessed
  • any claims the member paid during the suspension can be submitted.

Which medical aid provider is offering what relief?

Discovery

Members with the equivalent of at least one month’s contribution in their medical savings account (MSA) can use the balance to pay their monthly total contributions. MSA funds can be used to pay membership fees for up to three months.

Momentum

Members can use funds in their HealthSaver accounts to pay their monthly total contributions.

Fedhealth

It has applied to the MSC to allow members to use savings to pay for contributions. Members who are unable to pay their contributions will not have their membership terminated, but will be suspended for three months during which the member will not be covered.

Profmed

Members unable to pay their contributions will not have their membership terminated, but will be suspended for three months during which the member will not be covered.

Bonitas

Bonitas has applied to the MSC to allow members to use savings to pay for contributions.

Medihelp

Members unable to pay their contributions will not have their membership terminated. Instead, their memberships will be suspended for three months.

What should you do if you’re struggling to pay your contributions?

If you’ve lost your income during lockdown – as many people have – your options are limited, but consider these moves.

1. Reduce your monthly premium by downgrading your plan from:

  • non-network to network
  • comprehensive to cost-saver
  • saver to hospital-only
  • hospital-only to entry-level.

Remember that you would receive fewer benefits and be responsible financially for higher out-of-pocket spending.

2. Reduce your monthly contribution by lowering the amount you pay into your MSA.

Don’t cancel your medical scheme cover ­– consider your options

Most medical aid schemes outline in their rules that a member may terminate their membership of a scheme by giving 30 days written notice. All benefits cease on the last day of membership.

We understand this is an extraordinarily difficult time. However, we strongly advise you not to cancel your medical scheme cover.

Now, more than ever, you don’t want to be admitted to a government hospital where hygiene and resources are not as good as private hospitals or facilities.

If you cancel your current membership and reapply at a later stage, the medical scheme you join may require a Declaration of Health and impose waiting periods, exclusions and late-joiner penalties.

How we can help…

Don’t suspend payment or cancel your medical aid without speaking to a broker.

At IFC, our independent medical aid consultants can advise you on the best medical aid cover for your individual needs and budgets – including the best options if you need to opt for a lower-cost plan.

Please see here for our contact details during lockdown.

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