Is your late joiner penalty worked out correctly?

We have found that some schemes and brokers misrepresent or miscalculate how the late joiner penalty is applied.

Should you be paying a late joiner penalty?

  • If you are under 35 years, or were younger than 35 when you joined your current scheme, you do not pay a late joiner penalty
  • If you have been a member of a medical aid since April 2001, and have not had a continuous break in coverage of more than 3 months, you do not pay a late joiner penalty
  • If none of the above two points apply to you, then you might be liable for a penalty

How to work out the late joiner penalty?

Write down these two values, B and C:

  • B = your current age (if you are applying to a new plan) or your age at the time you applied to your current plan
  • C = all the years of credible medical cover you have had since the age of 21 (see below)
  • Work out: A = B – 35 – C
    (ie. “A” equals “your age” minus “35” minus “years of credible coverage”)

Your penalty is then as below:

Value of A: Penalty:
0 or less no penalty
1-4 5% of risk premium (excluding savings)
5-14 25% of risk premium (excluding savings)
15-24 50% of risk premium (excluding savings)
25+ 75% of risk premium (excluding savings)

Let’s look at an example

  • Jo is 50 years old. She had medical aid cover when she was 22 – 26 yrs old (4 years) and again when she was 35-42 yrs old (7 years). She was 47 when she applied for her current medical aid.
  • Applying the formula:
    A = ?
    B = 47 yrs (Jo’s age at time of application)
    C = 4 + 7 = 11 yrs (Jo’s total years of medical aid cover)
    Therefore, A = B – 35 – C = 47 – 35 – 11 = 1
    Jo pays 5% surcharge on the risk premium.

What is credible coverage?

  • Any membership of a South African registered medical scheme since the age of 21.
  • Membership of hospital insurance does not count.
  • Membership of a medical scheme overseas does not count.
  • Membership as a uniformed employee of the South African National Defence Force, or a dependant of such employee, who received medical benefits from the South African National Defence Force
  • Membership of the Permanent Force Continuation fund, but not as a dependent under the age 21

Some further notes:

  • The late joiner penalty may be imposed by the schemes, and they do so at their own discretion.
  • The penalty applies to the risk portion of your premium, not the savings portion
  • The late joiner penalty is permanent
  • Some schemes will tell you that they can only accept a medical aid membership certificate as proof of “credible medical coverage”. This is incorrect, as the Medical Aid Schemes Act states that if you have made every effort to obtain a membership certificate but cannot, then an affidavit from you outlining your previous membership is proof enough. Why would you not be able to get proof of membership? Well, if you were a member of a medical scheme that has since “disappeared” or one that was unable to keep digital records, it is unlikely that you will have a membership certificate. There are dozens of medical schemes that existed 15 years ago that don’t exist today.

What to do if you think you are overpaying?

  • Speak to your broker or your scheme if you do not have a broker. Explain the situation to them, and ask them to fix it. By law, they have to recalculate your new premium immediately.
  • If you are not successful, you can approach the Council of Medical Schemes with a formal complaint