Legal cold shoulder for those

Legal cold shoulder for those returning to SA: The Medical Schemes Act

The Medical Schemes Act has a formula by which returning South Africans must, for the remainder of their lives, pay punitive premiums of between 5% and 75% to a medial aid because they did not belong to South African medical aid schemes while out of the country

Legal cold shoulder for those

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Pretoria has seen fit to broadcast a message loud and clear to all returning South Africans: ‘Keep out, or you will be heavily fined for having lived abroad’. Repatriates who choose to settle in Mzansi after time overseas now face a sober awakening no sooner than they have unbuckled their plane seatbelts: a rather surreal law, the Medical Schemes Act 131 of 1998, which will effectively penalise them for the rest of their lives for having emigrated or lived outside South Africa. This law has an upside in that it protects current members of South African medical aids from late joiners – those who only start paying for medical aid cover once they are already sick – by levying heavy fees on the latter.

Now for the downside.  The Medical Schemes Act has a formula by which returning South Africans must, for the remainder of their lives, pay punitive premiums of between 5% and 75% to a medial aid because they did not belong to South African medical aid schemes while out of the country (South African medical aids may only give 90 days of cover to South Africans residing outside the country). After 90 days, you simply cannot belong to a South African medical aid scheme outside the country, and so, if you emigrate or live overseas for more than three months, you will pay for it forever. The punitive payments depend on the amount of time you have spent outside the country:

  • 0-4 years: 5%
  • 5-14 years: 25%
  • 15-24 years: 50%
  • 25+ years: 75%

The formula required to establish your probable extra payment is a somewhat complex one, but let’s look at one example:

You belonged to your parents’ medical aid until age 25. Then you were without medical aid cover for five years before acquiring medical aid cover for a further five years. Next you emigrated to the UK, where, for 14 years, you belonged to Pruhealth, which is associated with Discovery Health. Now, at the age of 49, you have returned to sunny South Africa.

The formula gives you credit for the four years in which you were both above 21 and a dependent of your parents’ scheme. The five years on your own scheme also count. However – sadly for you – the state has decided that your 14 years with any medical aid do not count – not even with Discovery Health’s British partner. You should have belonged to a South African medical aid (although this would have been impossible). So now, you have only 9 years’ credit.

But wait, that’s not all. Due to a rather Monty Pythonesque provision of the Act, medical aid cover will only be credited after the age of 35 – leaving our 49 year-old returnee with only 5 years’ credit. This puts you in the 5-14 year bracket above – and compels you pay 25% extra in medical aid premiums for yourself and your family, forever.

So, where you and your family might have paid a R4000/month premium had you always remained in the country, you will now have to pay up to R12000 more annually, with later increases.

I know this to be true because it happened to me. After 11 years of cover by Discovery’s Pruhealth in the UK, I approached an insurance broker who informed me by email that Discovery says it must enforce this rule, as it is law. Two other medical aid schemes said the same thing.

Melani Winkler, senior legal adjudication officer of the registrar office for the Council for Medical Schemes, responded to my complaint, “Whilst we agree that there is merit in the questions raised by your complaint, the law does not permit us to make a ruling contrary to the provisions of the Act.The scheme is therefore entitled to impose the late joiner penalty on your membership in terms of the current provisions of the act.

Who benefits from this irrationality? The medical aid schemes certainly profit by a system that punishes individuals heavily for being unable to make use of its services for a time. In the UK, you cannot, in the long term, use a South African driver’s licence. Why not fine or punish returning South Africans for their years without a valid driver’s licence?

In the USA, you cannot pay SARS tax. Must you be fined for it when you return?

We live in an increasingly borderless world. Cyberspace has no borders, of course, but even those between countries are growing ever more porous to the flow of capital, products, ideas, people and skills.

Surely all this is positive. What kind of government would presume to stop this flow by doing its best to keep out the capital and experience of its own citizens in the diaspora? Does it suit some warped political agenda? The Medical Schemes Act – or rather, the Unintended Consequences Act – enriches medical aids and harms everyone else. Will this be enough to stir our politicians into realising their great mistake?


Read more: 

The cost of inefficient government

SA professionals in UK warned of insurance cover gap

Move to South Africa: TAX!

Vertaal deur Brett Petzer