Now is the time to compare medical schemes

Employers: Now is the time to compare medical schemes

6 January 2009

Profmed : info@fanews.co.za

Some employers subsidize the membership contributions of their staff to a select range of open medical schemes. As new contributions (and sometimes reduced benefits) are announced, employers are permitted to use the period leading up to the end of the financial year to change schemes in consultation with staff.

The Medical Schemes Act specifically permits such changes at the beginning of the financial year, without the application of general and condition-specific waiting periods that might apply if an individual changes to another medical scheme. In practice, however, employers change scheme membership of their staff throughout the year.

The announcement of premium increases and benefit adjustments in December and January thus allows employers the opportunity to compare different medical schemes and give the necessary notice period in the event that they intend to leave one scheme to join another.

Profmed has received confirmation from the Council for Medical Schemes that proposed increases in contributions for 2009 are in order. The scheme has five options, the entry level option ProActive has a contribution fee of R670 for the principal member, while the top option, ProPinnacle has a contribution fee of R2 582 for the principal member.

Profmed is a restricted medical scheme which was initially launched as a scheme for members of the medical profession. More recently membership eligibility has widened to include any person with a four-year degree, or two or more degrees that together constitute four or more years of study, which qualifies that person to provide a professional service. Students in their fourth year of study in a field that qualifies them to provide professional services are also eligible.

International rating agency, Global Credit Rating (GCR) has awarded the scheme an A+, with the rating maintained on positive outlook. This denotes a high claims paying ability with good protection factors.

Profmed is a traditional medical scheme, which offers greater certainty on benefit cover, as the limits are clearly defined. New-generation medical schemes, on the other hand, make use of medical savings accounts and self-payment gaps to stretch health care cover to all members.

According to the Council for Medical Schemes 2007 annual report just less than half of Profmed’s members (44.9%) are members of the entry level ProActive option. The scheme figures also indicate that the entry level option was cash positive at the end of 2007, which is relatively unusual for an entry level scheme. The option with the next highest number of members is the ProSecure option, with 7 062 members, as of December 31^st 2007. Profmed has a solvency ratio of 56.5%. This is above the required statutory requirement of 25%. During 2007 the scheme ended the year with a negative operational result.

According to the principal officer of the scheme, Graham Anderson, this was a deliberate strategy to ‘bring down the reserves, as this is member money.’ Anderson said that the scheme had budgeted to end 2008 with an operational cash negative result.

‘We thought that it would be fairer to our members to budget for a loss, and finance this loss with investment income,’ said Anderson.