Did you know that medical schemes aren't allowed to make a profit?
We cover the first portion of your treatment over a 12-month cycle in full
A medical scheme is a non profit organisation that is governed by a board of trustees. It must be registered with the Council for Medical Schemes.
This means it does not have shareholders or pay dividends. It also means that the scheme's income can only ever come from member contributions and investment returns. The scheme pools all members' contributions to fund members' claims. Any extra funds are transferred, in line with regulations, to scheme reserves for the security and benefit of members. Therefore, a medical scheme does not make any profits.
Schemes exist for their members as all funds are pooled and safeguarded. Funds are to be used to pay claims in line with the scheme's rules, and ensure that all members are cared for fairly, relative to their plan choice. All medical schemes in South Africa operate in line with the Medical Schemes Act 131 of 1998 and are regulated by the Council for Medical Schemes.
What is the difference between a restricted medical scheme and an open medical scheme?
Restricted (closed) medical schemes are administered on behalf of companies for their staff and their families or can be joined by people working in a particular industry.
Open schemes are open to the public and anyone can join if they are over 18, not currently a member of another medical scheme and can afford to pay the monthly contributions.
Why does Discovery Health (Pty) Ltd administer our Scheme?
Discovery Health Pty (Ltd) provides administration and managed care services to Tsogo Sun Group Medical Scheme. These managed care services are rules-based programmes that use clinical and financial risk assessments to provide appropriate, high quality and value-focused healthcare services.
Schemes can either outsource their administration or perform this function in house. The medical scheme environment is complex. It requires significant expertise to manage a scheme effectively. Most schemes in South Africa use external administration organisations to provide these expert services to their members. Member contributions will most likely be higher if schemes were to provide these services themselves.
It is essential that schemes and their administrators work with the same objectives in mind - which is to care for their members at an acceptable cost - even though administrators can make a profit, unlike schemes.
Medical scheme administrators charge administration fees to manage aspects such as:
- Risk tools to protect the scheme and its members
- Benefit design
- Underwriting
- Services to members and health providers
- Collection of contributions
- Processing of claims.
What restrictions does legislation impose on a medical scheme?
The Medical Schemes Act 131 of 1998, as amended, regulates all medical schemes. The biggest challenge in managing a medical scheme is that legislation imposes many restrictions that the scheme must balance. These restrictions are:
1. Open enrolment
All medical schemes must accept all applicants and charge them the same monthly contribution (per benefit plan), regardless of their age and health status.
2. Regulatory reserve requirements
When a member joins, a scheme must hold 25% of the yearly contribution in cash reserves from day one (even before the member has paid their first contribution).
3. Prescribed Minimum Benefits (PMBs)
All medical schemes must provide a set of minimum healthcare benefits. These conditions and procedures are called Prescribed Minimum Benefits (PMBs).