Older Than 35? Medical Aid Late Joiner Penalties Apply

You don’t want to leave joining a Medical Scheme too late, because it’s just going to end up costing you more money than it should. After the age of 35 you will pay a late-joiner penalty and if you are interested in finding out how much more you are going to end up paying, make sure you read the rest of this article.

Let’s quickly knock off the reason why Medical Schemes are legally allowed to apply late-joiner penalties:

It’s to prevent anti-selection (stop members from looking to join the scheme later in life when they are older and more likely to need cover). Imagine for a second Medical Schemes couldn’t enforce a law like this, we would all be bouncing around in our twenties and thirties without medical aid cover and only start looking to get onto a Medical Scheme in our forties when we felt we were starting to run the risk of getting ill. Not an ideal situation for a scheme is it?

So the Government decided in order to protect Medical Schemes from anti-selection, they would allow Medical Schemes to apply late joiner penalties to anyone over the age of 35. These penalties work in bands and we have provided a table below:-

Penalty Bands Maximum Penalty
1 – 4 years Contribution x 5%
5 – 14 years Contribution x 25%
15 – 24 years Contribution x 50%
25+ years Contribution x 75%

How would this work?

Let’s look at an example:

Mary has never belonged to a Medical Scheme before. She is 51 years old and has now decided she wants to join. Remember, 35 is the cut off age, so Mary falls into the penalty bracket (15 – 24 years) with a maximum penalty of 50% applied to her contribution.

Mary has decided to opt for a medical aid plan that suits her needs and one that is priced at R2000 per month. But because of the late-joiner penalty she will now need to pay R3000 per month

(R2000 pm contribution x 50% late-joiner penalty = R3000 p/m contribution)

Unfortunately the late-joiner penalty doesn’t fall away at any stage, so Mary will need to continue paying it for as long as she is a member of the scheme.

If you can afford to get onto a Medical Scheme you need to do it sooner rather than later. Delay it for too long and you are going to get penalized.

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The iHound