Members of medical schemes in South Africa, whether they are individual members or belong to company medical aid schemes, are grappling with annual contribution increases.
Medical aid increases have, for more than a decade now, been above both inflation and salary increases. The interim solution for many people is to “buy down” on their medical aid cover in order to offset the difference between what they can afford and the above inflationary cost increase of their medical aid cover (move to a cheaper benefit option that may offer less cover). Alternatively, they cancel their medical aid policy altogether.
Whilst many employers may include medical aid cover as part of their employees’ remuneration package, it is important to understand what is meant by “company medical aid”. It is not mandatory for South African employers to provide medical aid benefits for their employees, although many companies do in fact still include it as an additional perk. The key trend currently is however that of a “cost to company” (CTC) approach to employee remuneration and in particular, to move away from subsidising medical scheme cost. Any medical aid contributions paid by your company (whether they subsidise it or whether you are on a CTC salary structure), will be a taxable benefit to you and will be included in your income as a fringe benefit. There is no longer any tax advantage for companies to subsidise their employees’ medical aid contributions; hence the increased trend of CTC remuneration packages and leaving it up to you to structure your own benefits expenditure.
The question that often arises is whether your company can really force you to belong to a specific medical scheme(s)?
YES and NO.
YES – companies in South Africa may enforce membership of a particular medical scheme(s) if it is provided for within the framework of conditions of service *, and / or if you receive a subsidy from your company.
NO – if your company dictates that you must belong to a certain open medical scheme(s), but it is not specifically provided for in your employment contract, then you have absolutely no obligation whatsoever to belong to your company’s preferred medical scheme(s).
If you are on a CTC package, which seems to be the approach most companies follow, then you should be able to belong to any medical scheme of your choice. The scenario is often that companies will collect your medical aid contributions (from your salary) and then pay the preferred medical scheme(s); so by forcing you to belong to a certain scheme is in fact just making their payroll administration easier. On the other hand, if your employer does not pay your contributions to your medical aid on your behalf, you will have to pay your contribution via a debit order or via a direct deposit.
The South African Constitution guarantees every citizen of South Africa “freedom of choice” and not to be discriminated in any way against him / her. However, one often sees the exact opposite happening when an employer makes it a condition of employment to belong to a certain medical scheme(s), especially if the employee is on a CTC salary structure. This practice could and should be challenged by existing and new employees, as other schemes may offer more affordable premiums and better relative value for their families.
As with everything in life, there are also always some alternatives available to choose from, should your company “force” you to belong to their medical aid scheme(s). One such alternative is to be covered by your spouse’s medical aid, in other words, your company may not force you to belong to their chosen medical scheme(s) if you are on a CTC package and your spouse is the main member on another medical scheme of your choice.
Internet forums are littered with complaints from people arguing that they should be allowed to choose their own medical scheme. Thami Bolani, chair of the National Consumer Forum, agrees that the issue of freedom of choice insofar as the selection of medical schemes is concerned, needs “serious attention”. Bolani believes that employees should not be forced into a particular medical aid scheme simply to make payroll administration easier.
* This may be the case if you work for an employer who has a closed medical scheme (i.e. employees working for Truworths, Woolworths and Unison Risk Management may only belong to Wooltru Healthcare Fund, or employees of the South African Police Service may only belong to Polmed). It can also be the case if you work for an employer who has appointed one or more open medical scheme(s) as the only medical scheme their employees may join, provided that the employment contract makes provision that you may only join a certain open medical scheme(s).