The pending changes to the Medical Schemes Act and the Long-term and Short-term Insurance Acts to accommodate the demarcation regulations were made on 1 April 2017 including the new definition of ‘business of a medical scheme’.

The definition of ‘business of a medical scheme’ in the Medical Schemes Act 1998 makes it clear that if you charge a premium or contribution for undertaking liability for providing a health service, for granting assistance in defraying the costs of a health service or to render a health service in association with a medical scheme, you will need to be registered as a medical scheme under the Medical Schemes Act.

The Long-term Insurance Act and the Short-term Insurance Act have new definitions of a ‘health policy’ and an ‘accident and health policy’ which prohibits any insurance policy which does the business of a medical scheme (pays medical expenses) unless it fits within the demarcation regulations.

The demarcation regulations have special categories of insurance including gap cover (not exceeding R150 000 a year), non-medical expense cover as a result of hospitalisation, testing and treatment of HIV/AIDS, TB & malaria, international travel insurance, medical emergency cover and frail-care assistance (long-term policy only).

Pending the establishment of low-cost benefit options for medical schemes in about two years’ time there is an exemption process in place. Exemption from the Council for Medical Schemes will enable some insurers who qualify under the strict requirements to continue providing medical expense insurance under the jurisdiction and levy system of the CMS. The process offers limited scope for exemption.

The demarcation regulations expunge the medical expense benefits of millions of policyholders including, according to the FSB, employees insured under any group health and accident policy which pays for medical expenses in addition to stated benefits.