How does a group medical aid scheme work?

group medical aid schemegroup medical aid scheme
group medical aid schemegroup medical aid scheme


How does a group medical aid scheme work?

Offering your employees the benefit of a medical aid is something that all employees should be looking into. You will find that their loyalty, productivity and morale improves once they know that they have proper support in place for medical emergencies. However, you may not be aware of how group medical aid plans or schemes work, so read on for an outline of how a group medical aid scheme works.


Open or restricted medical aid scheme?

There are two main types of group medical aid plans that employers can choose from, namely open or restricted. A closed or restricted medical aid scheme is specific to companies or industries, as in the case of Bankmed or the Fishing Industry Medical Aid Scheme.

The average contribution to a closed medical aid is much lower than an open one, which is highly beneficial to your employees. An open medical aid scheme is more suited to an individual, whereas a restricted or closed scheme is geared towards companies who would like to offer health benefits to their employees.


How does the employer contribute?

This is probably the most important question that is running through your head right now: how do I contribute to a group medical aid scheme? Some employers pay a percentage of their employees’ medical aid contributions directly into the medical aid scheme.

Other employers offer a full remuneration package, known as cost-to-company (CTC) packages. These packages include the total cost of benefits, such as travel allowances and medical aid contributions. In the case of a CTC package, the employee is responsible for making monthly contributions to a medical aid scheme. The payments by the employer will not exceed the agreed monetary value of the CTC remuneration package.


What to look for in an employee’s medical aid

If you are considering a medical aid scheme for your employees, sticking to one provider will make the process easier. It is important to focus on the key financial indices, meaning that you should focus on the ability of the provider to pay claims.

Independent global credit ratings, cash reserves, solvency ratios, the average age of beneficiaries and the pensioner ratio are all key aspects that you will need to look at when considering a medical aid for your employees. If you are unsure about which medical aid scheme is right for you, contact a professional insurance broker for advice.


Post-retirement healthcare funding

Companies who run their own closed medical aid scheme have to take post-retirement funding into account. This is referred to as ‘pre-funding’ which entails putting enough monies into the fund so that there is enough once the employee retires.

It is best to start planning for this earlier rather than later. You will be able to ensure that you have sufficient monies available to finance continued schemes contributions as well as providing for post-retirement healthcare funding for your employees. If you are unable to afford to do so, you could offer to pay a percentage into your employee’s medical aid, allowing them to use the rest of their money to save for retirement.

You cannot force employees to belong to a specific medical aid scheme

While you can enforce membership of a particular medical scheme(s) if it is provided for within the framework of conditions of service such as if you have a closed medical scheme, you are not allowed to force your employees to belong to a medical aid scheme that is not provided for within their employment contract.

If you are providing your employees with a CTC package, then they are able to choose whichever medical aid scheme they prefer. If you are contributing to their medical aid scheme, you still do not have the right to dictate which scheme they choose to belong to, unless you state specifically in your terms of employment that you prefer to make contributions to a certain medical aid or if you provide your employees with a subsidy. However, your employees are not obligated to become members of this medical aid.


Ask your employee’s opinions

One of the best ways to decide on which medical aid scheme to join is to ask your employees what they feel the best benefits would be for their needs. If you have a young company, you may find that a general hospital plan is the best option, but if you have older employees then a comprehensive medical aid is the best option.

Once you have found out what they need, you will be able to find a medical aid provider that meets all of them. You should look into a closed or open medical aid, and whether or not you will be contributing directly to the scheme or offering a CTC package. Remember to budget for post-retirement healthcare funding and to figure out how you will be contributing to the monthly repayments.

group medical aid scheme