All your late joiner penalty questions answered!
What is a Late Joiner Penalty?
A late joiner penalty (LJP) is a permanent penalty of 5% -75% paid by some medical aid members who are over 35 years old. Not everyone over 35yrs pays this penalty!
The LPJ was put in place to encourage potential medical members to join a medical aid while they are still young, and presumably more healthy than they will be at an older age. If it wasn’t for the penalty, healthy people would only join a medical aid when they need it, and this is not sustainable for the medical aid funds.
How is this penalty calculated?
You’ll need a pen and paper, and possibly a calculator. We include many examples below, to help you work it out correctly.
- First count out how many years it has been since you turned 35. This will be “A“. (If you are under 35, the LPJ does not apply to you and you don’t have to work anything out1). A = Current age – 35
- Then, work out how many years you have spent on a credible medical aid since you turned 21 (see below for definition of “credible”). It’s ok if this is zero yrs. This will be “B“.
- Now, subtract (A)-(B) to calculate your penalty band. Apply this to the table below. The left hand column below is your answer to “A-B”, and the right column is the penalty you will pay.
Apply the Penalty Band to the table below:
| Penalty Band: | Contribution: |
|---|---|
| 1-4 | Risk Premium+5%+Savings Contribution (if any) |
| 5-14 | Risk Premium+25%+Savings Contribution (if any) |
| 15-24 | Premium+50%+Savings Contribution (if any) |
| 25+ | Premium+75%+Savings Contribution (if any) |
Examples:
- You are 43 years old, and were a member of a medical aid for 5 years since you turned 21:
Penalty Band = A – B = (43yrs – 35yrs) – (5 yrs of cover) = 3 years = 5% penalty - You are 55 years old and were a member of two medical aid schemes in the past. One for 6 years (23-29 yrs) and one for 15 years (32-47yrs)
Penalty Band= (55yrs – 35yrs) – (6yrs + 15yrs) = -1 = No Late Joiner Penalty - You are 50 years old and were a member of a UK based medical scheme for 13 years:
Penalty Band= (50yrs-35yrs) -(0yrs) = 15yrs = 50% penalty
What is “credible cover”?
“Credible past cover” is any past membership of a South African medical aid scheme.
I had medical cover overseas. Does that count as past cover?
No.
I had medical insurance. Does that count?
No, although we have heard that some schemes do make exceptions for Primary Health Products that are under their umbrella.
Note:
- The late joiner penalty is calculated as a percentage of the basic risk premium. There is no premium paid on the savings portion of the premium.
- Credible medical cover is defined as “belonging to a recognised medical aid scheme”. If you cannot prove your past membership and have taken all reasonable steps to try and obtain proof, you can submit an affidavit outlining your past membership, and this has to be accepted by the scheme.
- Some schemes are beginning to recognise certain medical insurances as credible cover.
- According to the Medical Act, if a penalty has been applied incorrectly in the past, it does not automatically get “paid back”, but needs to be fixed going forward.
- Late joiner penalties follow members, even if they change schemes.
Bonus Tip: How to save on your LJP
If there are two adults on your plan, make sure that the one with the highest LJP is the dependant, not the main member. Their premium will be lower, and thus the penalty will be lower too.
Don’t forget about waiting periods!
If you wait to join a medical aid only when you are ill, you will probably have have a waiting period applied. It could be as long as 12 months.
Who does NOT have to pay?
You definitely don’t have to pay a late joiner penalty if…
- …you are under 35 years, or were younger than 35 when you joined your current scheme
- …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
It is also possible that if you join through your employer group (and not individually) that the late joiner penalty is “forgiven”. This is employer-group dependant though. You’d have to speak to your HR for the details.
I’m over 35 with no medical aid. Do I have to pay the Late Joiner Penalty?
Not necessarily.
If you were a member of a medical aid from the age of 21, even if you eventually cancelled your membership, all the membership years count as “credit” if you are 35yrs+. See above formula for more details.
How long do I have to pay the Late Joiner Penalty (LPJ)?
An LPJ is forever, and will likely follow you when you change plans and schemes.
I am a medical aid member, not paying an LPJ. Will I pay one if I change schemes?
It’s possible, but unlikely. Work out the formula above, just to make sure.
