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 New: hospital cover from short term insurers pay out primary health care expenses
and hospital-related costs

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Hospital Cover from Short Term Insurers 



A health insurance policy is hospital cover from short term insurers for South Africans wanting reasonably priced health cover. These policies are sold by an insurance company in terms of the long-or short-term insurance Act.  


When the premium holder falls ill, the policy pays for certain benefits. Of course, within the policy, there will be some exclusions. 


It was thought that medical insurance was providing products that resemble the features of a medical aid, but with low-cost premiums.  


Most of the time medical insurance excludes pre-existing conditions. In cases of accidental injuries for instance, it will pay out a set amount into your bank account. Medical Insurance may often also include death and funeral cover with your plan. 

In contrast, a medical scheme is required by law to pay for the treatment of a list of 270 prescribed minimum benefits (PMBs). They also have to pay for the treatment of 26 chronic conditions as well as in-hospital benefits according to the NRPL or National Recommended Price List.   

Too many similarities 

The Demarcation Regulations want to address the fact that some health insurance products are too similar to some of the benefits that medical schemes offer. These Regulations specify the kinds of health insurance policies that are allowed under the Short-term Insurance Act. 


The proposed conditions on health insurance products are meant to ensure that the sale of health insurance policies doesn’t diminish medical schemes. 


It is thought that these health insurance products cause harm to the medical scheme’s environment because they attract younger, healthier people away from medical schemes. It means that the older, less healthy people who are dependent on medical schemes for their cover will see an increase in costs.  


The Second Draft Demarcation Regulations  


These take into account comments from the first draft. The revised draft recognises the role that health insurance policies play, but these products have to complement medical schemes. The Second Draft Demarcation Regulations will still allow for the continued sale of Gap Cover and Hospital Cash Plan insurance.   


The second draft Demarcation Regulations aim to define and regulate health insurance policies from medical schemes.  


There are several categories of health insurance policies that are seen to be doing the same sort of business as that of a medical scheme -  


Cover for shortfalls in medical payments – gap cover: 

The first draft Regulations suggested banning gap cover products, but these policies can continue, provided they operate under strict product parameters and are also monitored. 

Hospital cash plans: 

Hospital Cash Plans pay out a benefit with hospitalisation and these stated benefits aren’t related to the actual cost of any medical service. It covers costs such as loss of income while in hospital. 

Primary healthcare insurance policies: 

These policies provide limited medical service benefits. Services include the likes of emergency medical care, dentistry and GP visits. 

These plans have to complement medical schemes and will also be subject to underwriting. 

The saga continues. Now it seems that the latest announcement by the Council for Medical Schemes is that no primary health insurance plans (hospital cover from short term insurers) will be permitted after March 2021.  







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