When you apply to join a medical scheme, they can (in terms of the Medical Schemes Act) apply waiting periods and late joiner penalties (LJP). This legislated structure is meant there to provide medical aid schemes some measures through which to protect their risk pool & solvency.
It is important to know that no medical aid can refuse a person entry. They may, however, make it difficult through an underwriting process that will investigate your disclosures including contacting previous schemes.
What is underwriting?
This is asking questions and, sometimes, requiring tests or reports from providers on your health. Through what they then uncover, they can impose waiting periods and late joiner penalties. To what extent depends greatly on several factors.
What are waiting periods?
This is a time period that is imposed on your membership from starting date. During these periods your cover will be limited as below. You will be expected to pay premiums during this time. There are three types of waiting periods:
- General waiting period of 3 months where nothing is covered;
- General waiting period of 3 months waiting period where only Prescribed Minimum Benefits (PMB’s) are covered;
- A 12-month pre-existing condition waiting period. This excludes any claims relating to this pre-existing condition for this period.
The Act then lays out how each waiting period can be applied and divides people into 3 main groups:
| 1 | 2 | 3 | ||
|---|---|---|---|---|
| Group 1 | People who have not been a member of a medical scheme for more than 90 days. | X | X | |
| Group 2 | People who have been on an existing medical scheme for 24 months or more and have had a break of less than 90 days | X | ||
| Group 3 | People who have been on an existing medical scheme for 23 months or less and have had a break of less than 90 days | X | ||
What are Late Joiner Penalties (LJP’s):
An LJP is a percentage increases in your premium. This is calculated on your premium excluding any savings amount included in total. They impose this ‘underwriting’ on ANYONE joining their scheme. A late joiner penalty (LJP) is applied to the member’s contribution for the rest of their lives. It is also carried through to OTHER schemes once imposed.
They work as follows – taking the years you have been off a medical aid older than the age of 35:
| 1 to 4 years off a medical scheme: | 5% increase in premium; OR |
| 5 to 14 years off a medical scheme: | 25% increase in premium; OR |
| 15 to 24 years off a medical scheme: | 50% increase in premium; OR |
| 25 years plus off a medical scheme: | 75% increase in premium |
Perspective Recommendation
Disclosure is imperative when joining a medical aid. If you don’t disclose something you will cause problems in the future. Please also ensure that if you do choose to cancel your cover you understand future consequences of this action if you want to re-join. Then also if you are thinking of changing medical aids that you have all documentation of previous memberships (from 35 years of age) to avoid LJP’s.
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