· Built around the Medical aid late joiner penalty calculator
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South African medical schemes must accept you whatever your age or health. The trade-off is that, if you leave it until you are 35 or older and cannot prove earlier cover, the scheme may charge you a late joiner penalty on top of your contribution - for as long as you are a member, even if you later move scheme. Here is what that costs in rand, how the waiting periods work, and why the first thing to do is ask.
Who counts as a late joiner
- You are a late joiner if you are 35 or older on the day you apply to join a scheme, as a member or an adult dependant (regulation 11).
- Cover since before 1 April 2001 exempts you, as long as you have had no break of more than three consecutive months since then.
- Every year of "creditable coverage" you can prove counts in your favour. That is time on a South African medical scheme (as member or dependant), on an exempt scheme, as a uniformed SANDF member or dependant with SANDF medical benefits, or on the Permanent Force Continuation Fund. Time as a dependant under 21 does not count.
- A sworn affidavit listing the periods and the schemes is enough proof if you cannot get the paperwork (regulation 13(6)). Find proof after you joined? The scheme must recalculate the penalty from the date you hand it in (regulation 13(4)).
How the penalty is worked out
Regulation 13 gives one formula: penalty years = your age - (35 + years of creditable cover). The answer puts you in a band, and each band has a maximum:
- 1 to 4 penalty years: up to 5% of the contribution.
- 5 to 14 years: up to 25%.
- 15 to 24 years: up to 50%.
- 25 years or more: up to 75%.
The penalty applies only to the part of the contribution for the member or adult dependant who is the late joiner - not to your children (regulation 13(1)). Many schemes go further and charge it only on the risk part of the contribution, not on any savings part. These are maximums: a scheme "may" apply them, and its own registered rules set what it actually charges.
Not verified from a primary source: that a particular scheme charges the penalty on the risk portion only. Regulation 13(1) limits it to the late joiner's part of the contribution; the risk-portion rule is scheme practice - check your scheme's rules.
Joining at 35, 45, 55 or 65 - the cost in rand
Assumptions, so you can check the sums: R4 000 a month is the contribution the penalty is charged on (the late joiner's own risk portion), there is no creditable cover to prove, the scheme charges the full legal maximum, and you stay a member until age 85. Rands are today's rands - contributions rise every year, and the percentage rises with them, so the real amounts will be higher in rand.
- Join at 35: no penalty. Penalty years = 35 - (35 + 0) = 0.
- Join at 45: R1 000 a month (10 penalty years, 25% band) - R480 000 over 40 years.
- Join at 55: R2 000 a month (20 years, 50% band) - R720 000 over 30 years.
- Join at 65: R3 000 a month (30 years, 75% band) - R720 000 over 20 years.
The surprise is the band edges. At 39 you have 4 penalty years and the cap is 5% - R200 a month, R110 400 to age 85. A year later, at 40, you hit the 25% band: R1 000 a month and R540 000 to age 85. Joining at 40 can cost more over a lifetime than joining at 45, because you pay the same 25% for five more years. The same cliff sits at 50 and 60. Move the sliders and watch the steps.
Run it on your own age and cover
The late joiner penalty calculator takes your age, the years of cover you can prove and your own contribution, and shows the band and the monthly and yearly penalty.
The penalty is part of your contribution, so it also counts toward what SARS gives back: the medical aid tax credit calculator shows the monthly credit, and the take-home pay calculator shows the effect on your salary.
Waiting periods: the other cost of joining late
Separate from the penalty, section 29A of the Medical Schemes Act lets a scheme make you wait before it pays. What it may impose depends on your cover in the 90 days before you apply:
- No scheme cover in the last 90 days: up to a 3-month general waiting period (no benefits at all) and up to 12 months for any condition you already have (29A(1)). Unlike the next two cases, the Act does not exempt prescribed minimum benefits here.
- Moving from a scheme you were on for up to 24 months (and less than 90 days ago): up to a 12-month condition-specific wait, but not for prescribed minimum benefits, plus whatever was left of a waiting period your old scheme had imposed (29A(2)).
- Moving after more than 24 months on a scheme: up to a 3-month general wait, again not for prescribed minimum benefits (29A(3)).
And where a scheme may not impose waiting periods at all:
- Changing option within the same scheme - unless you were still serving a waiting period, which can carry over (29A(4)).
- A baby born while you are a member (29A(5)).
- A job change, or your employer changing or ending its scheme, when your previous cover ended less than 90 days before you apply (29A(6)). For an employer switch, the move must happen at the start of the scheme's financial year or with reasonable notice. An unexpired waiting period from the old scheme can still be carried over (29A(8)).
The scheme may ask for a medical report only on conditions you were treated for, or advised to get treated, in the 12 months before you applied (29A(7)) - and if it asks for tests, it pays for them (regulation 12).
Ask first: prior cover may count
A real case: when CalcSA's founder's family joined a South African scheme, their health cover history was the UK's National Health Service - not a South African medical scheme. A broker put the family's history to the scheme and they joined with no late joiner penalty and no waiting periods.
That is a story, not a promise. Read strictly, the regulation's list of creditable coverage names South African schemes, exempt schemes, the SANDF and the Permanent Force Continuation Fund - foreign cover, public or private, is not on it. What makes room for a better outcome is the wording: the Act and regulations say a scheme "may" impose penalties and waiting periods, up to the maximums. They set a ceiling, not a requirement.
Not verified from a primary source: whether, and on what proof, any scheme accepts foreign cover (such as the UK NHS or a foreign private insurer) to reduce a late joiner penalty or waive waiting periods. That is decided by each scheme's registered rules and underwriting, not by the regulations. Ask the scheme to confirm any concession in writing before you join.
- Gather proof of every year of cover - letters from former schemes, or a sworn affidavit naming the schemes and dates.
- If you have foreign cover, ask whether it counts - with the insurer's or health service's letter in hand.
- Ask whether the scheme charges the full band or less, and on which part of the contribution.
- Joining through an employer? Ask whether its group arrangement changes the waiting periods or the penalty - and get the answer in writing.
Talk to a broker
CalcSA is working on a broker partnership - it is not live yet. Until then, if you are 35 or older and joining a scheme for the first time, or moving to South Africa with cover from abroad, speak to a broker accredited with the Council for Medical Schemes (section 65 of the Act says no one may act as a broker without accreditation). Ask them the questions above, and ask for the scheme's answer in writing.
Sources
- Late joiner and creditable coverage definitions (regulation 11), penalty bands, formula, proof and transfer (regulation 13), medical report costs (regulation 12): Regulations under the Medical Schemes Act, GNR.1262 of 1999 as amended by GNR.1360 of 2002 - Council for Medical Schemes consolidation.
- Waiting periods (section 29A, inserted by the Medical Schemes Amendment Act 55 of 2001) and broker accreditation (section 65): Medical Schemes Act 131 of 1998 - Council for Medical Schemes consolidation.
- The rand figures: CalcSA's own sums - regulation 13 maximum band x an assumed R4 000 contribution, x 12, x the years from joining to age 85, in today's rands - the same method as the late joiner penalty calculator.
- Not verified from a primary source: that schemes charge the penalty on the risk portion only, and whether any scheme accepts foreign cover - both depend on each scheme's rules. The family story is the founder's own experience, not a general rule.
Calculators used in this post
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