The impact of new gap cover and hospital cash plan laws
Sujeeth Bishoon, executive head at Acuideas
Johannesburg, Gauteng: After four years of debate, new regulations regarding gap cover and hospital cash plans will be enforced as of the 1st of April 2017.
Government re-looked at the legislation as the lines between medical scheme products and health insurance became increasingly blurred, which is problematic as these offerings prescribe to different laws.
“Many consumers cannot afford comprehensive medical scheme plans,” explains Sujeeth Bishoon, executive head at Acuideas. “Hence, they opt for taking out a low-cost medical scheme plan and bridging their limited cover by taking out medical gap cover as well as a hospital cash plan. This kind of plan, in comparison to comprehensive medical scheme cover, is the more cost-effective option to ensure medical cover for the whole family.”
The new regulations are as follows:
- Gap cover will be limited to a R150 000 payout per client per annum and will only apply to in-hospital visits.
- Hospital cash plans will be limited to R3 000 per day or a R20 000 lump sum per year.
- Primary healthcare policies will be outlawed.
As these regulations will be implemented from the 1st of April 2017, all new policies will have to comply with them, whereas existing policies will only do so from the 1st of January 2018.
“It is important for brokers and advisors to consider what the potential impact of these new regulations might be on the consumer,” Bishoon states.
Health Minister Aaron Motsoaledi believes that these medical scheme products give, healthcare practitioners, such as doctors, the opportunity to charge patients more instead of competing for patients either by offering better benefits and quality or by lowering their prices.
However, Bishoon says, “the legislation changes will create exposure for those consumers who cannot afford expensive comprehensive medical aid plans, or it may result in consumers incurring the additional costs to upgrade to comprehensive medical plans. This ultimately puts pressure on the disposable income of the consumer.”
In an attempt to lower the financial strain on consumers, the medical scheme industry and the Council for Medical Schemes are currently in discussions about a low-cost benefit option (LCBO). Although this option would fall under the Medical Scheme Act, amendments to the current legislation will have to be made as one stipulation states that 270 Prescribed Minimum Benefits should be available to all members at cost price, pushing up membership costs.
“The role brokers and advisors play will become more important as they scrutinise over both their client’s needs and the available medical insurance offerings in order to find the best possible insurance solution for their clients,” Bishoon concludes.
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