Don’t expect a blanket premium relief, but if you are struggling, contact your medical scheme for options.

If you are struggling to meet your medical scheme contribution this month, don’t hold out for a blanket offering of a premium waiver.

Medical schemes pay out on average around 97% of their healthcare funds in annual claims so there is not much room to offer premium holidays, especially with fears that COVID-19 claims will put further pressure on funds.

The only option would be for schemes to access their funding reserves, however the Council for Medical Schemes (CMS) has confirmed in its “COVID-19 Medical Schemes Industry Guidelines” that it will not allow schemes to drop below the 25% solvency threshold. This means that schemes will not be allowed to use these estimated R60 billion in reserves to offer financial relief.

“This offers very little ‘premium relief’ for individuals and companies during an extremely financially strained time,” says Jill Larkan, Head of Healthcare Consulting at leading wealth and financial advisory firm, GTC.

Larkan says, however, that schemes with solvency levels above 25% will be able to offer greater relief to their members as opposed to those who have carefully managed their premium allocations to closely meet the required 25% threshold.

It seems that the position taken by schemes is that any assistance must be done on a carefully vetted, case-by-case, basis.

“The continued application of this 25% restriction surprised me,” Larkan says. “My understanding was that this solvency requirement of 25% was set up under the Medical Schemes Act specifically for a catastrophic situation just like this, and whilst there is no doubt that some of it may be used for the payment of extraordinary COVID-19 claims to be experienced in the not too distant future, I believe that more could have been done to ensure that members are financially able to maintain membership until then.”

However, Discovery Health Medical Scheme (DHMS) says if they had to offer premium relief to all members it would deplete all R19bn of reserves in just three months, rendering the scheme unable to pay members’ claims and sustain itself.

It seems that the position taken by schemes is that any assistance must be done on a carefully vetted, case-by-case, basis.

Relief options available to members

Using existing savings to pay for premiums

Members may use their personal savings account to offset premiums (over a maximum of three months). Members may only use their accumulated medical savings to date and the CMS guidance is that only members with at least 12 months’ worth of accumulated savings should be allowed to use their savings for contribution relief.

Larkan says few medical scheme members have much savings left by the middle of the year to utilise for premium relief.

“Analysis of our own healthcare clients, here at GTC, reveals that only 1.9% of our members actually qualify for this payment relief option as most people only have this year’s allocated savings, with very few members who were able to carry over balances from the previous year,” says Larkan.

Discovery Health Medical Scheme says, however, it will allow members to use their Medical Savings Account (MSA) if they have at least one month’s worth of accumulated MSA. Discovery says that more than 200 000 families on DHMS have sufficient accumulated MSA to apply for at least one month’s contribution relief.

Damian McHugh, head of sales and marketing at Momentum Health, says that members can use both their HealthSaver and HealthReturns to pay for their premiums. HealthReturns are obtained through rewarding active days.

Small businesses with fewer than 200 employees can request a ‘premium holiday’

“Small, medium and micro enterprises (SMMEs) with fewer than 200 employees may approach their medical aid scheme to request a ‘premium holiday’ on the understanding that although premiums are not payable during this period, cover for their members is maintained,” says Larkan. But premiums will need to be repaid to the medical aid as soon as the ‘holiday’ is over.

Discovery also states that provisions of the National Credit Act must be adhered to, that the repayment period may be a maximum of 12 months with a 0% interest rate.

Individual premium breaks or reductions

While schemes may not reduce their reserve funds below 25%, schemes with excess funds may still consider assisting customers on a case-by-case basis.

“Clients will be able to apply for assistance which we will offer on a case-by-case basis,” says McHugh. “That will take the form of a deferment of premiums and then paying that back over a period of 12 months maximum.”

Downgrade plans

According to Discovery, members can downgrade their plan choice within their existing medical scheme at any point in time.

McHugh says Momentum is allowing members to change their provider choices within their option to a lower price. So, for example, you could opt for a network hospital or to obtain your chronic medication from the state.

COVID-19 covered from risk not savings

Discovery has created the “DHMS WHO Global Outbreak” benefit, accessible to members on all Discovery Health plans. This benefit provides funding from the Scheme’s risk pool to cover the tests and treatment for confirmed COVID-19 cases.

All policyholders of Discovery’s employee-based health insurance product, Discovery Primary Care, have access to full funding for testing, and treatment costs for confirmed COVID-19 cases. Additionally, any waiting periods for Discovery Gap Cover policy-holders are being waived, to fund valid COVID-19 claims.

This article first appeared in City Press.