Medical scheme myths and misconceptions

The world of medical schemes is a complicated one - and there are many myths and misconceptions doing the rounds. The Medical Schemes Act, 1998, regulates the operation of medical schemes in South Africa and the Council for Medical Schemes is the industry’s regulatory body. So to ease your mind, here is the truth about some myths and misconceptions.

Myth: Medical schemes make a profit

Fact: Medical schemes, as such, are not profit-making organisations. They might be part of bigger insurance companies, which do make a profit, but there are different laws governing insurance products and medical schemes. If a scheme registers a profit, it goes into the reserves of the scheme, and this belongs to the members. Medical schemes have trustees, not shareholders. Only 8 of the 23 registered open medical schemes in South Africa achieved an operating surplus in 2015.

Myth: A scheme can refuse my application

Fact: No, it cannot. A scheme can require a late-joiner penalty and impose a general waiting period of three months, or a condition-specific waiting period of no more than 12 months, on a new member. However, a scheme cannot refuse your application if you can pay the membership contribution.

Myth: Medical insurance is the same as a medical scheme

Fact: Medical insurance is not covered by the Medical Schemes Act and functions more like an income-replacement product than medical cover. A medical insurance product pays you out for certain diagnoses, or a hospital stay - it does not pay your medical bills.

Myth: If my scheme gives 100% cover it means that I don’t have to pay in anything

Fact: Not true. Schemes can cover you for 100% of the medical fund tariff, which may be considerably lower than the cost of the private hospital or private doctor. You could, however, end up with a big co-payment.

Myth: A scheme can force me to use network hospitals

Fact: No, it can’t. A scheme can encourage you to do so by guaranteeing no co-payments from your pocket if you stay within the network. If you choose to use out-of-network hospitals or doctors (except in certain emergencies), the scheme can make you pay the difference, but they can’t force you to use certain healthcare services.

Myth: My employer has to subsidise my scheme contributions

Fact: No, they don’t. The employer can, as part of your employment contract, require you to belong to a certain scheme, but they don’t have to subsidise your contributions. If you work for the state, you might be lucky in getting a third of your contribution subsidised, but it is a privilege, not a right.

Myth: I cannot put my parents on my medical scheme

Fact: If they are financially dependent on you, and you can prove it, they can join as adult dependants on your scheme.

Myth: A scheme can tell me which medication to use

Fact: They can encourage you to use the medication on their medicines formulary. If you choose not to, you might have to pay the difference in cost, but they cannot force you to take a particular type of medication.

Myth: A scheme can exclude me from treatment for a pre-existing condition forever

Fact: No, they can’t. They can only impose a 12-month waiting period for a pre-existing condition. If however, they find out that you did not disclose a pre-existing condition, you can be found guilty of fraudulent behaviour, and there might be penalties imposed because of that.

Myth: A hospital plan will only pay for in-hospital treatment

Fact: Generally, yes, but all hospital plans also have to pay for the treatment of 25 chronic conditions. You might also be entitled to claim for six-monthly GP visits to have your chronic prescriptions renewed.

Myth: I can change options whenever it suits me

Fact: You can usually only switch options once a year, in January, on most schemes. This is done to streamline administration of things such as savings accounts, which are allocated on an annual basis. Nothing stops you from changing options every year.

Myth: A medical scheme cannot terminate my membership

Fact: They can, if you are unable to pay the monthly contributions, or if you are found guilty of making fraudulent claims.

Myth: Once my benefits run out, that’s it for the year

Fact: Even if your savings account is depleted, you are still covered for in-hospital treatment. You can also apply to your scheme for further ex-gratia payments for day-to-day treatment. These are evaluated on a case-by-case basis, according to certain protocols.

Myth: I cannot claim anything during the three-month waiting period

Fact: You couldn’t buy a new pair of spectacles, but if you were in an accident, you could definitely get treatment at the nearest trauma unit.

Myth: The money in the savings account is yours

Fact: It is yours in that it can only be used by you to pay for your medical expenses. You cannot draw the money out in cash, or use it to settle the bill for co-payments. This money is carried over from year to year if you don’t use the full allocation. It will only be paid out to you four months after you have left the scheme.

Written by Susan Erasmus

Sources: The Council for Medical Schemes; Alexander Forbes Health