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In terms of the regulations, a “late joiner” means an applicant or the adult dependent of an applicant who, at the date of application for membership or admission as a dependent, as the case may be, is 35 years of age or older, but excludes any beneficiary who enjoyed coverage with one or more medical schemes as from a date, without a break in coverage exceeding three consecutive months. The purpose of late joiner penalties and waiting periods is for the medical scheme to build up reserves for people who join the scheme only when they are older or become sick and to encourage them to join earlier in life.
If members only join later in life, they have not contributed to reserves while they were younger and healthier. Therefore they are required to help build up a small reserve by paying penalties and/ or having a waiting period imposed. Once a penalty applies, this is payable for life, irrespective of which scheme the member joins. The penalty only applies to the risk portion of the contribution and not the medical savings account, also known as PSA (personal savings account). In all other instances, the formula provided by legislation and the calculation is applied as follows:
A = B - (35 + C)
Where A = penalty band, B = age and C = creditable coverage
Creditable coverage includes membership as a main member, spouse or beneficiary of a registered South African medical scheme. International or foreign cover as well as hospital cash plans or stated-benefit insurance policies are not recognized.
The late joiner-penalty bands applicable to members aged 35 years and older are:
|Years||Maximum penalty to be applied|
|1 - 4 Years||5% of risk contribution per member (or 1.05)|
|5 - 14 years||25% of risk contribution per member (or 1.25)|
|15 - 24 years||50% of risk contribution per member (or 1.5)|
|25+ years||75% of risk contribution per member (or 1.75)|
Waiting periods – A waiting period is a period during which the member has to wait before he/ she can make any claims. The act defines a “general waiting period” which means a period in which a beneficiary is not entitled to claim any benefits. He would still have to pay contributions but would not be allowed
to claim for any medical costs whatsoever. It is usually applied for a period of three months. A “condition-specific waiting period” is defined in section 29A of the act as a period during which a beneficiary is not entitled to claim benefits in respect of a condition for which medical advice, diagnosis, care or treatment was recommended or received within the twelve-month period ending on the date on which an application for membership was made. This means that, if a member suffered from any illness or medical condition in the year before joining the scheme, he/she may be asked to wait a year before he/she can claim for costs relating to that condition or illness. This waiting period is applied for a period of 12 months.
|Less than 90 days (0 to 89 days)|
|Break of more than 90 days Or never been on a medical scheme||On medical scheme for longer than 24 months||On scheme less than 24 months (previous waiting periods may still be in place)||Regardless of previous membership, Change of employment or Employer changes medical scheme|
|General waiting period of three months|
|Conditions specific waiting period of twelve months|
|Waiting periods apply to PBMs|