How medical aid in South Africa actually works
Medical aid here means a medical scheme regulated by the Council for Medical Schemes (CMS) under the Medical Schemes Act. A scheme is a not-for-profit risk pool owned by its members. Contributions from everyone go into one pot that pays claims according to the scheme’s rules.
Two pillars define the system:
- Open enrolment and community rating
Any person can apply to join an open scheme, and the contribution for a given option is the same for everyone on that option by age band or family composition, not by health status. Schemes can’t charge you more because you’re ill. - Prescribed Minimum Benefits (PMBs)
All options must cover emergency care and a list of conditions called PMBs. PMBs must be funded in full when you use the scheme’s Designated Service Providers (DSPs) and follow formularies and protocols. If you choose non-DSP providers, a co-payment can apply unless it was an emergency or the DSP wasn’t reasonably accessible.
These rules balance access with sustainability. Schemes still manage risk through networks, managed care protocols, waiting periods, and penalties where allowed by law.
Scheme types and benefit options
Open vs restricted schemes
- Open schemes accept the general public. Examples include large national schemes and several mid-size players.
- Restricted schemes serve defined groups such as certain employers, industries, or professions. If you qualify, these can be competitive due to focused risk pools and employer support.
Common benefit tiers
- Hospital plans
Cover in-hospital treatment for illness and accidents, usually no day-to-day out-of-hospital cover except for PMBs and specified chronic benefits. Many now use hospital networks to secure lower contributions, with higher co-payments for non-network hospitals. - Hospital plans with limited day-to-day
Add defined GP visits, basic dentistry, or acute medicine allowances to a hospital plan. Useful for members who want a bit of cover without a full savings wallet. - Saver options (with a Medical Savings Account)
A portion of your premium (capped by regulation) is allocated to a Medical Savings Account (MSA). You use this for day-to-day claims like GP visits and acute meds. When it runs out, you pay cash unless the option offers an Above Threshold Benefit after a self-payment gap. - Comprehensive options
Full hospital cover plus richer day-to-day benefits, often with threshold structures and more generous chronic and specialist rules. These suit families with high predictable spend.
Networks and formularies
- DSPs and networks: Using the scheme’s chosen hospitals, GPs, pharmacies, and specialists keeps claims within negotiated tariffs. Going off-network can trigger co-payments.
- Formularies and protocols: To manage cost, schemes use preferred medicines and evidence-based guidelines. Your doctor can motivate for exceptions where clinically indicated.
What actually drives your premium
- Hospital network choice
Network options are usually cheaper than “any hospital” options, but they limit facility choice. - Benefit richness
Comprehensive day-to-day funding makes options more expensive than pure hospital plans. - Chronic disease coverage
All options must cover PMB chronic conditions, but how they fund non-PMB chronic meds, specialist consults, and diagnostics varies widely. - Risk management design
Tighter formularies and managed care rules reduce premiums. More flexibility generally costs more. - Demographics of the pool
Older risk pools cost more to insure. Large schemes often have scale benefits and stronger risk equalisation internally across options.
PMBs: the safety net you should understand
- What PMBs include: Emergencies, 271 diagnosis-treatment pairs, and the Chronic Disease List conditions.
- How to access: Use DSPs and comply with the scheme’s protocols to avoid co-payments.
- Practical implication: Even on a hospital plan, PMBs still cover out-of-hospital care for listed chronic conditions when you follow rules. Don’t confuse this with a free-for-all; formularies still apply.
Tip: If a provider is not a DSP, ask for a cost estimate and confirm PMB funding rules with your scheme before you proceed, unless it’s an emergency.
Waiting periods, late-joiner penalties, and underwriting
Waiting periods can legally be applied in specific scenarios:
- A general three-month waiting period where the scheme doesn’t pay for non-PMB claims.
- A 12-month condition-specific waiting period for pre-existing conditions.
- The rules depend on whether you had continuous cover in the last 90 days and whether you are a first-time joiner, moving across schemes, or had a break in membership.
Late-joiner penalties are percentage loadings on contributions for members who join after age 35 with long gaps in cover. The penalty level depends on how many years you were uncovered since 35.
Takeaway: If you are switching and have proof of recent, continuous cover, underwriting is lighter. If you had a long break, expect stricter terms. Always keep membership certificates.
Hospital plan vs comprehensive cover: which suits who
Choose a hospital plan if:
- You are young to middle-aged, generally healthy, and can pay routine GP visits cash or via a low-cost network plan.
- You prioritise catastrophic protection and PMB chronic cover over day-to-day convenience.
Choose a saver or comprehensive option if:
- You have families with frequent paediatric visits, dentistry, or specialist care.
- You have a predictable chronic burden that exceeds basic allowances.
- You value convenience of cashless day-to-day claims and want protection above a threshold.
A balanced strategy for many households is a good hospital plan paired with careful budgeting for day-to-day care. If your out-of-hospital spend is consistently high, a saver option may be more cost-effective than paying cash.
The role of gap cover
Gap cover is not a medical scheme. It is an insurance policy that pays certain shortfalls between what a hospital specialist charges and what your scheme reimburses in hospital. It does not replace medical aid, and it won’t fund general day-to-day claims. Policies have annual and per-event limits and exclusions.
Use case: You are on a hospital plan or saver option and want protection against surgeon or anaesthetist charges above scheme rates during admissions. Read the policy wording for oncology co-payments and sub-limit protection.
How to compare plans the smart way
- List your real needs
- How many GP visits did you use last year?
- Any chronic conditions and medicines?
- Planned procedures in the next 12 months?
- Preferred hospitals or specialists?
- Check hospital network compatibility
If you have a preferred hospital or specialist, confirm they’re in the option’s network. If not, price the co-payment risk. - Study PMB and chronic rules
- Are your chronic meds on formulary?
- Are there motivation pathways if they aren’t?
- What dispensing channel must you use?
- Look at day-to-day funding mechanics
Savings percentage, threshold rules, dentistry and optical caps, radiology and pathology limits, and how specialist consults are funded. - Consider admin experience
App usability, digital authorisations, statement clarity, and ease of claiming matter more than brochures admit. A simple process saves time and frustration. - Model total annual cost
Contribution for 12 months + expected out-of-pocket spend − tax credits. Compare two or three options side by side. - Read the exclusions list
Cosmetic procedures, experimental treatments, and certain devices are routinely excluded or tightly managed.
Employer considerations for SMEs
- Restricted schemes vs open schemes: If your sector has a restricted scheme, compare it.
- Contribution structures: Many employers set a base plan and allow employees to buy up at their own cost.
- Condition of employment vs voluntary: Compulsory participation reduces anti-selection and can improve pricing.
- Wellness and absenteeism: Richer preventive benefits can reduce downtime, especially in physically demanding roles.
- Payroll and POPIA: Make sure consent and data flows to administrators comply with privacy laws.
Common pitfalls and how to avoid them
- Assuming all hospital plans are the same
Networks, co-payment rules, and oncology limits vary widely. Read the option guide, not just the marketing page. - Ignoring chronic formularies
Switching plans without checking your chronic meds can be costly if your brand is non-formulary. - Using non-DSP providers for PMB care
This is a common source of co-payments. Confirm DSPs before planned care. - Over-insuring day-to-day
If your household spends less than the savings allocation each year, you may be overpaying for convenience. - Missing underwriting windows
Breaks in cover can trigger waiting periods and late-joiner penalties. Keep proof of continuous cover.
Tax considerations
South Africa offers medical scheme fees tax credits for principal members and dependants. The amounts are updated from time to time. Keep medical tax certificates and claim out-of-pocket expenses according to SARS rules where allowed. If you are an employer, structure subsidies in a way that is fair, simple to administer, and compliant.
Trends to watch
- Network expansion and digital care
More options focus on strong GP networks, virtual consultations, and designated pharmacies to control cost while improving access. - Oncology and high-cost medicines
Precision therapies are rising. Expect tighter authorisation protocols and designated oncology networks. - Mental health access
Demand is increasing, with more structured benefits for therapy, in-hospital psychiatry, and digital support. - Hybrid plan design
Options that sit between hospital-only and comprehensive cover are growing, giving members more customised value.
A simple decision framework
- Start with risk
Choose the strongest hospital cover you can afford in a network you can realistically use. - Layer chronic
Ensure your chronic condition is properly funded under PMBs with DSPs and formularies you can follow. - Decide on day-to-day
If your annual spend is predictable and high, consider a saver or comprehensive plan. If not, pay cash and keep records. - Consider gap cover
Add it if you want extra protection against specialist shortfalls during hospitalisation. - Review yearly
Your health and the benefits change. Re-compare options each cycle.
Frequently asked questions
What is the difference between a hospital plan and comprehensive medical aid?
A hospital plan funds in-hospital treatment and PMBs. Comprehensive cover adds richer out-of-hospital benefits and often a savings account or threshold benefit.
Do all medical aids cover chronic conditions?
Yes for PMB chronic conditions when you follow DSPs and formularies. Coverage for non-PMB chronic conditions varies by option.
Can a scheme refuse to accept me?
Open schemes must accept applicants, but they may impose legal waiting periods and, if applicable, late-joiner penalties.
Is gap cover the same as medical aid?
No. Gap cover is separate insurance that helps with in-hospital tariff shortfalls. It does not replace a medical scheme.
How do I avoid co-payments?
Use DSPs, follow referral rules, and get pre-authorisations. Ask providers for quotes and check benefits before planned care.