Medical schemes differ quite significantly from traditional insurance. Medical
schemes are not-for-profit organisations and belong to their members. These schemes
operate by pooling together contributions from members and then making these funds
available to members who are in need of medical services. Any money that is surplus
stays in the scheme on the trust principle.
The investment aims of a medical scheme are to attain the highest possible ROI (return
on investment) in the long term in order to exceed inflation levels. The higher
the reserve levels in a scheme, the more aggressive the investment strategy would
be. They are also required to hold a surplus of funds equal to 25% of gross annual
contributions to ensure financial stability.
Medical schemes in South Africa are managed by a Board of Trustees, 50% of which
have to be members of the scheme. Members of the board must be capable of the duties
that they are required to perform and are tasked with ensuring that the scheme is
administered properly. If you are a member of a scheme, then you may attend annual
general meetings where you will be able to make your opinions and views heard and
present motions.
At the end of 2007 almost seven and a half million beneficiaries were covered by
medical schemes in South Africa. Medical schemes can either be open to the public
or closed to certain groups or organisations. The governments closed scheme (GEMS
- Government Employees Medical Scheme) grew by 300% compared to 2006.
In 2007, these schemes collected R64.7 billion from their members, while claims
amounted to R56.3 billion. Contibutions increased more for open schemes than for
closed schemes.
Medical schemes are significant players in South Africa’s financial sector, but
essentially exist and function for their members.
Should you wish to learn more about some of the open medical schemes in South Africa
take a look at:
-
Discovery medical scheme
-
Fedhealth medical scheme
-
Genesis medical scheme
-
Medihelp medical scheme