Dodge pesky penalties by medical schemes

Moving from South Africa is not as simple as packing your bags, jumping on a plane, and setting up abroad.

There are many considerations from financial, tax, and relocation perspectives, including potential risks, especially when it comes to healthcare.

This leads to a common question raised by internationally mobile South Africans: is there any benefit to keeping my South African medical aid when working abroad?

One of the key things South Africans working abroad must consider in this regard is the regulations governing medical schemes in South Africa.

Where these are not correctly understood, especially waiting periods and late-joiner fees, you may find yourself in a precarious position when you intend to return to South Africa.

ALSO READ: How Covid-19 changed how people use their medical schemes

According to the Medical Schemes Act 131 of 1998, medical schemes may apply waiting periods when new members join the scheme. During waiting periods, the new member pays full contributions, but cannot claim full benefits.

With medical schemes in South Africa, including Discovery Health, you can apply for a three-month general waiting period or a 12-month condition-specific waiting period if:

• You have a pre-existing condition.
• You have never belonged to a medical scheme before.
• You have had a break in medical scheme membership of more than 90 days.

The purpose of waiting periods is to protect the other members of the scheme in the grander picture of things. A waiting period ensures the new member cannot make large claims shortly after joining and then cancel their membership.

You can see how complicated it can become when you return to South Africa but cancelled your medical aid when leaving. You may have to wait up to 12 months to access and use medical aid benefits.

The Act allows medical schemes to apply a late-joiner penalty to an applicant and/or dependant if considered late joiners, when they apply to become members of the medical scheme.

A late joiner is an applicant or the dependant of an applicant who, at the date of application:

• Is 35 years or older; and
• Was not a member or a dependant of a registered South African medical scheme (foreign schemes and insurance policies are not recognised) on or before 1 April 2001; or
• Has allowed a break in membership for more than three consecutive months since 1 April 2001.

A late-joiner penalty is a higher monthly rate you pay for membership because you only joined a medical scheme at a later stage in life when you are more likely to need expensive cover from a medical scheme. Late-joiner penalties were introduced to protect medical schemes from people who wait until they are sick or older to join.

It encourages people to join a South African medical scheme while they are still young and healthy. The penalty is calculated by using the applicant’s age when they apply to join and the number of years they have not had medical cover since the age of 35.

This excludes any period of cover as a dependant under the age of 21.

Considering the impact of waiting periods and late-joiner fees, South Africans abroad must not make hasty decisions regarding their medical aid without receiving proper advice from a qualified insurance specialist.

It is advisable to keep your South African medical aid if you:

• Are working abroad on a rotational basis;
• Have immediate family residing in South Africa; and/or
• Intend to return to South Africa.

The prudent approach when in doubt is to downgrade your current plan to the lowest available option until such a time as you have established your permanent intent.

Should you then decide to return, you will be able to upgrade to your preferred option again, avoiding penalties, waiting period, or worse – being rejected.

Planning for your future is vital and healthcare is not a luxury, it’s a necessity.

• Maartens is an insurance specialist at Africorp Solutions