Although medical aid might seem like a big expense, especially during these times when our income might not be what we’d like it to be, it still is a much-needed financial safety net should one of your family members require urgent and expensive medical care. And let’s be honest, medical emergencies don’t wait for anything – not even pandemics – before they strike!
That said, Fedhealth is entirely sympathetic to the plight of those members who are experiencing financial difficulty, as well as the businesses that are suffering severe financial losses as a result of the lockdown.
In line with President Cyril Ramaphosa’s call for the greater South African community to pull together and offer help to each other where possible to weather the coronavirus storm, Fedhealth is offering a number of financial measures to assist our members during this time.
Members may have the opportunity to discount their contribution by 11% or 25% (depending on their plan) without sacrificing their level of cover by selecting a network based sub-option. Members may also opt to downgrade to a cheaper, less comprehensive option during this time. For further financial relief, members on the flexiFED option range can apply for a three-month payment holiday on their MediVault premiums. The Scheme has also applied for regulatory approval to allow members to use accumulated Savings to fund contributions for a period of time. In addition, companies can enter into a payment arrangement with the Scheme whereby contributions can be suspended for a period of time.
A little perspective…
However, Fedhealth, like many other medical schemes in the country, is currently not in a position to approve ALL requests for contribution concessions. By law, all schemes are required to maintain a solvency level of at least 25%. Waiving three months’ worth of contributions while continuing to pay members’ claims from the Scheme’s reserves would result in its solvency level (currently at 34%) dropping significantly below the required 25%. Recovering from this would take a number of years of prolonged benefit cuts and large contribution increases – negatively impacting all members and risking the Scheme’s ability to continue providing cover for the 150 000 lives that rely on Fedhealth for their healthcare needs.
A medical scheme has two sources of revenue – members’ contributions and investment income. Contributions help fund monthly claims, while the investment income can assist in months where claims are higher than contributions. Due to the impact of the COVID-19 pandemic, local and international markets have taken a hit, with the JSE down by almost 25% in the first quarter of 2020. As a result, Fedhealth reserves have taken a significant knock in the first quarter of 2020. The Scheme has put in place measures to mitigate the risk, but a possible global recession means that further losses cannot be ruled out. Since Fedhealth is a not-for-profit entity, it runs at a loss ratio of around 90% (compared to say short-term insurance companies that typically run at between 55-60%) and the Scheme is reliant on reserves to pay for claims in months where claims exceed contributions.
Disinvesting the Scheme’s reserves now when their values have fallen to provide temporary financial relief to members, will ultimately have a long-term, catastrophic downstream effect on the Scheme.
Given that Fedhealth benefits are generous as we pay out more from Risk than most medical schemes, and given that we expect to pay more COVID-19 related claims, it is critical that the Scheme remain financially strong in order to continue to provide for all its members now and in the future.
Therefore, if at all possible, you should prioritise your medical aid contributions to ensure that you have access to health funding during this difficult period.
Members who would like to make use of any of the measures as mentioned above, must please call the Fedhealth Customer Contact Centre on 0860 002 153 or send an email to firstname.lastname@example.org
COVID-19 CHATBOT ON THE WEBSITE
Within the LiveChat functionality on the Fedhealth websites, fedhealth.co.za, you can now select the COVID-19 Chatbot for answers to your basic coronavirus questions.