Don’t play the waiting game

Last updated on 12th December, 2017 at 05:11 pm

Choosing to join a medical aid later rather than sooner can be detrimental to your health and your wallet. We investigate how a waiting period works.

When you join a medical aid for the first time (or after not belonging to one for 90 days or more), you’re going to have to wait for a while before being able to make any claims.

What is a waiting period?

The rules and regulations governing medical aids (as well as gap cover) fall under the Medical Schemes Act and are more or less cast in stone. This includes a mandatory waiting period when you sign up. Normally, the waiting period is three months, but in the case of a pre-existing condition, such as cancer, or maternity benefits, you’ll have to wait 12 months before your cover kicks in. So, if you’re already expecting a baby when you join a scheme for the first time, you may have to foot the bill for pre-natal care and the birth yourself.

Why is there a waiting period?

Medical aids operate on a system where members essentially cross-fund each other. To equitably fuel this pool of funds, all members pay the same contributions, according to their option, regardless of their state of health, age or gender. In other words, younger and healthier members, who are less likely to make big claims, subsidise older and sicker members, whose care will cost more. So, if the percentage of high-risk members is greater than healthier members, the sustainability of the medical aid is threatened. Hence, the waiting period ensures that members make some sort of contribution to the fund, before they can start claiming.

What is anti-selection?

In South Africa, belonging to a medical aid is not compulsory, so people usually wait until they need cover to join. This is what the trade calls anti-selection, and again it affects the sustainability of the reserve. So, waiting periods and late-joiner penalties are built into schemes to remedy the ills caused by anti-selection, in the hope of persuading people to join before medical aid becomes a necessity.

More about late-joiner fees

Closely linked to waiting periods, late-joiner penalties are essentially a loading on premiums. They apply to people who only join a medical aid after the age of 35, and they can be imposed for as long as you belong to the scheme. Again, this is a mechanism against anti-selection. A formula, which works more or less on a sliding scale, is used to determine the percentage by which your contributions are increased. The same applies to people who have been out of the country and only return later in life. The reason is that schemes feel it’s not fair on other members to waive penalties on this category of membership, as they have not contributed to any local pools. And even if they have belonged to a scheme abroad, it’s very difficult for medical aids to verify this. In the case of medical aids, it is best to plan ahead and join when you’re young and healthy, rather than waiting and then having to pay more on your premiums when you’re older.

By Nicci Botha