Changes to medical shortfall insurance laws in SA

On 23 December 2016, after court procedures and at least two summary proposals regarding the necessity of gap insurance in South Africa, the government can no longer argue the need for gap cover products. Here we will have a look at the changes to medical shortfall insurance laws.

The government is still in their baby shoes on implementing a National Health Insurance scheme, and with just about 2.24 million citizens in South Africa dependent on health insurance products, the need for gap cover is absolute.

Gap Insurance products name will change to “Medical Expenses Shortfall Products.”

Requirements when applying for medical shortfall cover according to Medical Shortfall Insurance Laws:

  • Must be an active member of a medical scheme.
  • Policies issued after 1 April 2017 must meet the terms of the set of medical shortfall insurance laws.
  • Active policies taken out earlier than 1st of April have until January 2018 to meet the terms.

Medical Shortfall Insurance Laws

Three major changes in the new set of Medical Shortfall Insurance Laws:

The period those insurers will obligate policyholders to contribute but not be able to claim pending whichever:

Condition Specific Waiting periods are stating that in case a policyholder undertakes treatment in any manner medically for a particular condition over the time span of one year then a waiting phase of one year from the commencement of the policy will be relevant.

If the new policyholder was formerly a member of a different insurance medical shortfall plan for the prior 90 days and did not receive treatment for the specific condition, then NO waiting phase will be applicable.

Insurers underwrite these policies on a Group Basis Only.

The insurer may apply no prejudice in whichever manner.

So they can charge exception higher premiums taking in consideration the age of the applicant.

Maximum limit.

The maximum limit on the medical Expenses excess which in aggregate cannot exceed the amount of R150 000 per insured member per year.

Other changes in Gap Legislation.

  • Health Departments need to approve marketing material.
  • The word “Hospitalisation” and “Medical” are only to be used if the marketer uses the words “Medical Expenses Shortfall” in the wording.
  • All marketing material have to clearly state that this insurance is NOT a substitute for a Medical aid.

Brokers fees.

So brokers may charge fees between 5-20% according to the value of the premium that the member is paying. A maximum fee of 20% will be permitted.

Please complete the form on this page to get a FREE gap cover quote.

All info was correct at time of publishing