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Skip Navigation Linkslow-cost-benefit-options The future of Low Cost Benefit Options

The following Healthcare Newsletter was issued by ACA Employee Benefits – 2020

On 4 December 2019, the Council for Medical Schemes (CMS) released Circular 80 of 2019 in which they informed medical schemes, insurers and other interested parties of their intent not to continue with the process to develop and create a framework for the offering of Low Cost Benefit Options (LCBO’s) as has been envisaged over recent years. They further announced their decision that no products currently being offered under the Demarcation Exemption Framework will be allowed to operate beyond March 2021. The CMS indicated that these decisions have been made against the background of alignment with the broader health policy discussions which seeks to ensure adequate access to care, irrespective of economic status. ACA believes they refer here to National Health Insurance (NHI).

The Circular was released without prior consultation or engagement with the industry and will therefore necessitate engagement with the CMS and other regulators, in order to understand the rationale and most appropriate way forward.

The Demarcation Regulations were agreed between the CMS, the National Department of Health and the National Treasury in 2016 and envisaged that the exemptions for Primary Health Care Insurance products would remain in place until a regime for Low Cost Benefit Options (LCBO) would be implemented by the CMS. This has enabled many low-income families access to affordable primary health care.

The products which are potentially affected include all primary care products, like products sold by Momentum’s Health4Me, OcsaCare, Discovery’s Primary Care as well as Sanlam’s Everyday Health.

What now?

The question in everyone’s minds is whether this will mean the end of the mentioned products by 2021 and where it will leave the members currently on these products. If the products are stopped, employees currently covered by these products will typically lose employer subsidies and will be forced to pay out of their own pockets for healthcare. This will also increase the pressure on already stretched public healthcare facilities.

Yet, we are quite certain that strong arguments would be forthcoming from current primary care product providers, members and other stakeholders not to stop products without effective alternatives being available. If NHI or any other solution, such as the revised lower cost PMB package within medical schemes are not ready by 2021, we do not foresee this to go through. There is simply too much at stake for CMS and the Department of Health to leave members stranded without cover.

We believe that these products provide great value for employers and their employees who cannot afford medical scheme cover, and we would encourage our clients to continue supporting these products while a solution is found in consultation with the regulators.

We shall keep you updated with any developments.

Although this document has been prepared with due care and in good faith, the interpretations and opinions are those of the authors and are subject to change without notice. As such, the contents do not constitute definitive advice and should not be accepted as such. Neither ACA Employee Benefits (Pty) Ltd, Simeka Heatlh (Pty) Ltd nor the authors accept liability for any damage whatsoever or however it may arise, including but not limited to, direct, indirect or consequential loss that may arise as a result of sole reliance on the information herein. Competent professional advice should be sought when dealing with any contentious issue. ACA Employee Benefits (Pty) Ltd and Simeka Health (Pty) Ltd are wholly owned subsidiaries of Sanlam.



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