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What are Medical Schemes, How Do They Work, and Why Should You Join One?


In the wake of a steady decline in state-funded healthcare services, more South Africans now seek private care. Here’s how medical schemes can assist them. Years of underfunding and escalating numbers of patients have taken their toll on South Africa’s once proud public health service while prompting rapid growth in the private sector equivalent.

However, equipping a clinic with state-of-the-art equipment and hiring the best specialists in their field comes at a cost. Like any other business, private healthcare facilities must be profitable to continue funding their vital services. Therefore, the fees they levy on their patients must be realistic. Current estimates suggest that around eight million of those who make use of their services must rely on medical aid to help meet the high cost of accommodation, diagnostic procedures, physical treatments and medication.


The Nature of Medical Schemes

Although they are separate entities, medical aid companies operate along similar lines to the nation’s insurers. However, one significant difference between the two is that the former trade as not-for-profit companies and are overseen by a board of trustees and not answerable to any shareholders’ bidding. In common with insurers, they rely on the statistical principle known as ‘shared risk’. Simply put, they expect most members will submit only minor or no claims, leaving an adequate reserve of premium cash to meet the much larger claims of the minority.

It’s important not to confuse medical aid with medical insurance. Firstly the former is regulated by the Medical Schemes Act of 1998 and governed by the Council for Medical Schemes (CMS). The relevant bodies for insurers are the Long-term Insurance Act of 1998 and the Finacial Services Board, respectively.

The services they provide also differ as follows:

  • Health Insurance: As with all insurance products, each policyholder is insured for a fixed sum based on the perceived risk they pose and the value of the premium paid. That sum will be paid in the event of a claim and may or may not cover the actual expenses incurred. Furthermore, insurers may deny cover or load premium prices for applicants they regard as high-risk.


  • Medical Aid: By contrast, these products are specifically designed to cover all or most of the expenses arising from a stay in a hospital and other approved private healthcare costs included in their listed benefits. Also, medical schemes may not refuse cover to an applicant with a pre-existing condition, and all members will be charged the same price for any given product.


How Medical Schemes Work

Each scheme offers several different products. Their premium prices vary according to the benefits they include. Simply put, benefits are the services, procedures and medicines covered by the monthly premiums. Related claims are subject to individual and annual limits as stated in their product brochures and terms and conditions.

Since 1998, all medical aid products must include the prescribed minimum benefits (PMBs) defined by the CMS. These include cover for 26 named chronic diseases. Schemes are of two types, open and restricted. Only applicants from a specified company, profession, institution or professional body may join closed plans, while open schemes accept anyone.

Nevertheless, all medical schemes apply certain restrictions. Anyone who has been without cover for more than 90 days prior to joining will need to wait three months to start submitting claims. Also, members with pre-existing conditions other than PMBs must wait 12 months before any related claims will be processed. This compulsory waiting period prevents new members from leaving once their expensive treatments have been paid for, which could jeopardise a scheme’s cash reserves.


Why You Should Have Medical Aid

Even if you may be generally fit and seldom experience anything worse than a cold, sore throat, or a minor injury for which you have sufficient income or savings to pay for the treatment you may need, life is full of surprises, and not all are pleasant. Just two years ago, some South Africans found themselves in intensive care and unable to breathe without a ventilator when the Covid-19 pandemic swept the country without warning.

Fit or not, could you afford to pay R100K or more in the case of a medical emergency or severe accident requiring a prolonged hospital stay and surgery?

Medical aid is about peace of mind for members and their loved ones, and few medical schemes understand or cater for that as comprehensively as KeyHealth. Explore our 2023 benefits and start protecting yourself and your family today.