The payments, or premiums, that members of medical aid schemes pay each month are pooled and it’s from this collective pot that claims for medical expenses are paid out. In this way, the members are insured against the possibility of facing medical expenses too great to afford out of their own pockets.
Medical aid funds in South Africa are regulated by the Medical Schemes Act (1998). They are essentially non-profit organisations. Each fund belongs to its members, from which a board of trustees is elected.
There are approximately 124 medical schemes in South Africa, with a beneficiary base of 7 million and total annual contributions amounting to roughly R57 billion.
The ombudsman in place to enforce the stipulations of the Medical Schemes Act is the Council of Medical Schemes (CMS). This statutory body was established to oversee medical schemes’ private health financing. The South African Minister of Health appoints a Board, which in turn governs the CMS.
To calculate the premiums to be paid by members and annual premium increases, medical aid funds use a high-level budgeting system. Each fund estimates the total claims it’s likely to receive and the likely annual cost of medical treatment. Taking these estimates into account, it attempts to ensure that members’ premiums will be sufficient to cover the healthcare benefits specified in its agreements with its members.
In South Africa, annual premium increases are typically determined around the end of November.
Once you’re a member of a medical aid and you incur medical expenses that are covered by your plan, your healthcare provider – such as a hospital – may submit your medical bills directly to the medical aid for settlement on your behalf.
Alternatively, depending on the policies of the healthcare provider, you may need to pay for medical expenses up front and then submit your claims to the medical aid scheme, which will then settle the claims with you directly.