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Medical scheme non-disclosure Part 1

What is “non-disclosure”?

Have you ever applied for insurance cover, but failed to disclose all the relevant facts?  Or have perhaps just “twisted” some of the details in order to avoid waiting periods, exclusions, penalties, or higher premiums?

If you have done so, however innocent, unintentional and with or without malice it may have been, the fact of the matter is that you may have failed to disclose material information in your application  –  a practice referred to as “non-disclosure”.

Serious consequences

As a member of a medical scheme, few things can be worse than needing urgent or life threatening medical treatment, but then having to go through the shock and devastation of being kicked off your medical scheme and possibly having to cough up tens of thousands of Rands when huge hospital bills are declined by your scheme.

Not only do medical schemes have the right in terms of the Medical Schemes Act to cancel your membership on the grounds of non-disclosure of material information, but you may also be found guilty of an offense and liable on conviction to a fine, or to imprisonment.

Importance of full disclosure on application

When you complete your medical scheme application form, always be mindful of the fact that there can be serious consequences if you fail to declare material information about your medical history or that of your dependants.

New applicants are always required to disclose their current and previous medical history in terms of conditions and / or treatment received.  From this information the medical scheme will then assess your risk profile and may impose certain general and / or condition specific waiting periods.  This is done to protect current members of the scheme from new members who may purely join a scheme to claim for a certain event  –  for example, if they need an operation, and then leave the scheme again before they have made any meaningful contributions to the risk pool of the scheme (an act referred to as anti-selection).  Anti-selection prejudices other members who are contributing to the scheme on an ongoing basis and then have to carry the cost of those members who anti-select.

Medical schemes do their homework well

New members may think that it’s best to withhold certain medical information from their new scheme so that they could benefit immediately however, all medical schemes have various risk management mechanisms in place to detect cases of possible or actual non-declaration.

As a general rule, medical schemes don’t do any investigations into your previous medical history at the time that you join them.  Why should they…?  They have no reason to question any of the information provided in your application form.  But normally, if you apply for hospital or chronic benefits within your first year of membership (or thereafter) and the reason for the proposed treatment does not relate to a condition that was not disclosed on your application form, your medical scheme may nevertheless make enquiries into your medical history.

New applicants are always, in some form or another, required to sign their application form and to confirm that their answers and the information supplied in their application form, whether in their own handwriting or not, are true, correct and complete in every respect.  At the same time, applicants authorise their doctor(s) or any other person who may be in possession of any information concerning their health or that of their dependants, to disclose such information to the scheme.

Be honest.  You have nothing to lose.

Medical schemes cannot refuse your membership application, or increase your monthly contributions for any previous or existing health condition that you or your dependants may suffer from (or may have suffered from).  The “worst” that may happen, is that you may receive certain waiting periods on certain conditions.  This may be a 3 months general waiting period and / or a 12 months condition specific waiting period(s).

The trustees of medical schemes have a responsibility to the membership of the scheme as a whole, particularly those members who fully declared details of pre-existing conditions when joining the scheme and who were subject to the schemes’ normal underwriting criteria.  In the event of non-disclosure, they may terminate your membership ab initio (as if you were a never a member).

The devastating consequences of non-disclosure and of being kicked off your medical scheme when treatment is urgently needed and / or then having to pay huge medical bills far outweigh that of a possible waiting period(s).

Honesty is always the best policy.

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