Company Medical Aid with a Job
Medical expenses are a concern for every person. South Africa’s public health system leaves a lot to be desired and private health care in the country is expensive, to say the least. Most of us cannot afford more than a few days of hospitalisation with medical care from specialists. Many cannot even afford the deposit to be admitted to a hospital. Medical aid is the only option for the average earning citizen to access private health services.
While any person is allowed to join a medical in South Africa, irrespective of whether they are employed or not, these financial products are also quite pricey. The offering of a medical aid by an employer can therefore make all the difference.
Medical aid for employees are not mandatory. Companies are not forced by law to provide this perk to its workers. However, many larger corporations do so as an incentive to keep employees within the company. There may be stipulations on the part of the employer as to which medical aid will be covered and the portion of the monthly contributions that are subsidised are largely at the employer’s discretion. However, it is usually still to the employee’s benefit to have access to a company medical aid.
Open and Restricted Medical Aids
There are broadly two types of medical aids – open and restricted. The open medical aid is open for membership by the general public. Any South African can join an open medical aid. The restricted medical aid limits its membership to only certain companies, sectors of industries or people belonging to specific professional associations. Not all company medical aids are restricted schemes. Some companies subsidise the monthly contributions to an open medical aid. In the true sense of the word, this does not make it a company medical aid but rather a medical aid perk or subsidy. Even if you stopped working for the employer you could remain a member of the scheme.
The true company medical aid is a restricted scheme. You have to be an employee of the company to belong to this medical aid. When you leave the company, then you have a short period of time to switch over to another medical aid. Industry-specific and professional association medical aids are also restricted but have a broader membership. It is not limited to a specific employer but rather to the industry as a whole or all members of the association. So you could remain a member of the medical aid even if you changed job but within the industry.
Employers decide how much of the monthly contribution for medical aid membership will be subsidised by the company. Many companies offer a 33% subsidy (one-third), while more generous employers may offer a 50% or even 66% (two-thirds) contribution. In other words, if your medical aid monthly contributions comes to R1,000 per month, you employee will pay R333 and you are liable for the remainder from your own pocket. The amount is not limited to just the employee. Your spouse and minor children are usually also subsidised in this manner. However, employers are a bit cautious about subsidising adult children and other relatives.
It is important to remember that since medical aid is not mandatory, employers do not have to subsidise the monthly contributions in any way. Some employees are under the misconception that their employer owes them this benefit. Most employers offer a company medical aid or subsidy solely as an incentive to workers. There is also the thinking that workers who have access to quality medical services will be in better health and therefore more productive employees.
Advantages and Disadvantages
Although company medical and subsidised monthly contributions is advantageous most of the time, there can also be disadvantages especially when the only medical aid option is a restricted scheme.
Quitting Job or Getting Fired
Should you quit your job then your membership to the medical aid may no longer be valid. This usually does not happen instantly and a person may be covered for a certain period of time giving them enough time to move across to another medical aid. However, the employer contributions may cease immediately meaning that the ex-employee has to bear the entire membership cost on their own. Employees who are retrenched will usually be subsidised for a few months but this is largely dependent on the employer’s discretion. It is important to bear in mind though that there is a tax incentive for belonging to a medical aid. Even though your employer’s contributions may fall away when quitting a specific job or industry, you can still have some reprieve in the form of a tax deduction.
Choice of Medical Aid
Employers may subsidise a larger portion of the monthly contributions only for specific medical aids. Sometimes the employer’s contributions is only forthcoming if you are member with a medical aid of their choice. This means that if you as the employee joins another medical aid you may not enjoy the subsidy from your employer. Ultimately this limits a person’s freedom of choice in terms of selecting their own medical aid. In most instances you will not be significantly disadvantage by the actual medical benefits but you may not enjoy the extra perks that are available with some medical aids like a gym membership.
Cheaper Medical Aid Plans
It is important to note that all medical aids are essentially the same – you get for what you pay for. Plans may differ but the amount you pay for one plan will have the same benefits and cost about the same on another medical aid. Some restricted medical aids may offer more benefits but membership in these instances is for a few select individuals. There is a lot of confusion as to why some employees may pay less and others more for their medical aid membership.
It is important to compare “apples with apples”.
Cheaper medical aid usually means plans with less benefits or that the employer is paying a larger portion of the monthly contribution. There is no single medical aid in South Africa that is cheaper than the rest yet offers the same benefits as more expensive schemes. Remember that medical aids are non-profit organizations that are carefully regulated by the Council for Medical Schemes. All concerns and complaints about a medical aid, even a company medical aid, can be directed to the Council.