/ 17 April 2012

Treasury invites comment on health cover regulations

The treasury invited comment on Tuesday on draft regulations for short-term and long-term health insurance.

The draft demarcation regulations are intended to find a balance between certain health insurance products and the need to protect key principles underpinning medical schemes, the treasury said in a statement.

It explained that it was important for the public to know that medical schemes and health insurance products are different.

Medical schemes are not-for-profit organisations which operate like trust funds. They work on the principle of open enrolment, in that they can’t turn anyone away, they have a community rating where people pay based on income or number of dependents, or both, and have a set of prescribed minimum benefits (PMBs). Younger, healthier members cross-subsidise older members.

Short and long-term insurers, whose companies have shareholders, provide health insurance products.

“Anyone can buy a short or long-term health insurance policy, but the premium you pay will usually depend on the insurer’s assessment of your state of health,” the treasury said.

Older individuals, or individuals with pre-existing health conditions, pay more for health insurance cover, or could be refused cover if the risk is too high.

Medical schemes are not allowed to discriminate against a member on any grounds, including age and health status.

Health insurance products usually provide limited cover, which tends to set in only after some time has elapsed, and no benefits are guaranteed by law.

The treasury said the draft regulations do not propose the phasing out of all health insurance products, but only those which compromise the key principles of social welfare, solidarity and cross-subsidisation found in medical aid schemes (e.g. gap and top covers).

Some of the changes include setting the boundaries between paying a health insurance provider money towards living expenses while ill, but not for actual medical costs, and not allowing the refusal of cover to a policy holder who did not disclose a previous condition, unless it was wilful and negligent.

The draft regulations can be found on the Council for Medical Schemes’ website. April 23 is the deadline for comment. — Sapa