In October 2022, the High Court in KeyHealth Medical Scheme v Ngoepe No and Others considered whether the court a quo was correct in finding that a medical scheme was prohibited from using day-to-day benefits to fund the treatment and costs of Prescribed Minimum Benefit (PMB) conditions. The court found that the source of the funding is important. If the source is the savings account, then ‘moving’ the funds to a differently named account will ultimately result in non-compliance. Where the funding of the day-to-day benefits is from the savings account, the account cannot be used to fund PMB conditions.


The issue of medical schemes using medical savings in the accounts of members to fund PMB conditions is one which has been considered by our courts and the appeals board of the Council for Medical Schemes (CMS) over the years. The position, as recorded in regulation 10(6) of the Medical Schemes Act (MSA), is that a medical scheme cannot use the funds in a member’s savings account to pay for the costs of a PMB Condition.


In the KeyHealth matter, a member of the Scheme, who represented himself in the matter, initially lodged a complaint with the CMS. The nub of the complaint was that the Scheme was using funds allocated for day-to-day benefits for purposes of paying the costs of PMB Conditions. It was only after the funds in the day-to-day account were depleted that the Scheme would fund the PMB condition from its risk pool which exists for PMB items. The court found that the member’s savings account was being used by the Scheme to fund PMBs. This occurred because day-to-day expenses (eg. dentist appointments) were being taken from the member’s savings accounts thus prompting the prohibition against using day-to-day savings for PMB’s. The court found that it was purely an accounting administrative procedure which, in summary, sought to differentiate the use of funding which arises from the savings account. The court found that the Scheme was trying to evade regulation 10(6) by using the ‘disguise’ of day-to-day benefits, which if the disguise was removed, is nothing other than utilising the savings account to fund PMBs. The court also found that the Scheme’s rules do not allow such funding and, even if they did, the rules could not take precedence over regulation 8 of the regulations to the Medical Schemes Act which stipulates that any benefit option offered by a medical scheme must pay in full for the diagnosis, treatment and care of the PMBs.


It is important that medical schemes consider the source of funding when making payment for PMBs. If the source originates at from the medical savings account, then payment of PMBs is prohibited regardless of whether the account from which payment is made is not referred to as a savings account.