FINAL DEMARCATION REGULATIONS
Changes to some healthcare products. By Xolisa Funani, Financial Paraplanner- NFB Port Elizabeth.
There has been a bit of uncertainty regarding the outlook of gap cover, hospital cash back plans and primary healthcare insurance policies.
However, in December of 2016 the Finance Minister, Pravin Gordhan, and the Health Minister, Aaron Motsoaledi, published the final demarcation regulations under the Long-term and Short-term Insurance Acts of 1998 relating to the abovementioned products.
Some of these products will continue to exist, however, there will be strict regulations and limitations that they will have to comply with.
A brief look at these products and the changes that will apply:
= Gap cover: policies that cover shortfalls between medical scheme benefits and the rates that are charged by private medical service providers. As of 1 April 2017 gap cover policies will be limited to R150,000 per annum per individual. An example would be a family of 3 that will have a policy limit of R450,000. Note that existing gap cover policies will have to comply with the new regulations from 1 January 2018.
= Hospital cash back plans: these plans pay out a cash lump sum based on the number of days a client is hospitalized. There are currently no limits on these types of polices and some policy provisions are currently paying up to R5,000 per day spent in hospital. As of 1 April 2017 the new limit will be R3,000 per day spent hospitalised with an annual limit of R20,000; this limitation will be irrespective of the number of days spent in hospital.
= Primary healthcare insurance policies: health care insurance policies are
not medical schemes and therefore are not governed by the Medical Schemes Act, although they may blur the lines at times. They provide limited medical service benefits such as doctors ' visits, basic dentistry and optometry, and acute and chronic medication amongst other limited benefits. As of 1 April 2017 the primary health care insurance policies will be outlawed. The main reason behind this move is that these policies are moving into the realm of medical schemes, which often leaves consumers confused about the products. The policy providers have been given a two-year transition period to phase out existing primary healthcare insurance policies. The policy providers will most likely have to amend these primary healthcare insurance policies in order for them to comply with the requirements of the Medical Schemes Act as they will no longer be recognised as insurance products.
Should you have any further questions please do not hesitate to contact one of our NFB Private Wealth Managers at one of the following offices: East London 043-735 2000 = Port Elizabeth 041-582 3990 Cape Town 021-202 0001 = Johannesburg 011-895 8000
18 sensible finance Mar17