How medical aid works

A medical scheme is a registered, non-profit entity. Every member pays a monthly contribution into a shared fund, and that fund pays providers when members claim. Schemes are member-owned in the legal sense. They exist to serve members, not generate profit. They're separate from the for-profit administrators (like Discovery Health (Pty) Ltd) that run them day-to-day.

A medical scheme (often called 'medical aid') is regulated by the Medical Schemes Act and must cover Prescribed Minimum Benefits at cost. Medical insurance, sold as a 'health insurance policy', is regulated under the Short-Term Insurance Act, doesn't have to cover PMBs, and typically pays a fixed daily or per-event rand amount rather than the actual cost of care.

The CMS protects members. It registers schemes, approves annual contribution increases, enforces solvency requirements, investigates complaints, and publishes industry data. Every scheme rule change, new plan, and benefit amendment must be approved by the CMS before it takes effect. If you have a dispute with your scheme that customer service can't resolve, the CMS adjudicates it.

Open schemes (Discovery, Bonitas, Momentum, Bestmed, Medshield) are available to the general public. Closed schemes (GEMS for public servants, Polmed for police, BankMed for banking employees) are restricted to specific employer groups or professions. Closed schemes often have lower contributions because the employer subsidises and the risk pool is healthier (employed people).

The Act establishes the entire framework: the Council for Medical Schemes, mandatory PMBs, scheme governance, solvency requirements (Regulation 29 requires schemes to hold reserves of at least 25% of annual contributions), and the rules around broker commissions. It's the single most important piece of healthcare legislation in South Africa.

FAIS governs the people and businesses that advise on or sell financial products, including medical aid. Anyone who recommends a specific scheme or plan must be a Financial Services Provider (FSP) licensed by the Financial Sector Conduct Authority (FSCA), AND additionally accredited by the Council for Medical Schemes for medical-scheme intermediary services. Without those licences, you can describe products and help people compare them, but you can't recommend one.

By law, every scheme must hold at least 25% of annual contributions in reserves. If a scheme collects R10 billion in a year, it must have at least R2.5 billion in the bank to pay future claims. This is what makes medical schemes financially safer than for-profit insurers: they can't be drained by shareholders and they have a regulated buffer for bad years.

A hospital plan is the cheapest type of medical aid. It pays for hospitalisation, surgery, and major medical events. It does NOT cover GP visits, dentistry, optometry, or non-chronic medication out of hospital; you pay those yourself. Most hospital plans still cover the 27 chronic CDL conditions because that's a legal requirement.

A saver plan adds a portion of your monthly contribution into your own MSA, which you spend on day-to-day items: GP visits, optometry, dental, acute medication. Once your MSA runs out, you self-fund (Saver) or move into a 'self-payment gap' before any Above-Threshold Benefit kicks in (Comprehensive). Saver plans suit middle-income families who want predictable day-to-day cover without paying for the unlimited day-to-day benefit of top-tier plans.

Comprehensive plans give you everything: hospital cover, an MSA, and crucially the Above Threshold Benefit (ATB). Once you've spent your MSA and a self-payment gap, the scheme keeps paying for day-to-day care up to an annual limit. Specialist rates are usually higher (200 to 300% of scheme rate). These plans suit families with chronic conditions, frequent specialist needs, or simply a preference for predictable out-of-pocket spend.

A network plan trades flexibility for lower contributions. Use a network provider, get full cover. Use anyone outside the network, get partial cover (typically 70%) or pay the full out-of-pocket cost. Networks come in flavours: KeyCare network (entry-level), Smart network, Delta network (smaller hospital list), and Coastal/Regional variants. Every plan with 'Network', 'Smart', 'Delta' or 'KeyCare' in its name uses this trade-off.

Some entry-level plans charge less for low-income earners and progressively more as your income rises. This makes private healthcare accessible to people earning under R20,000/month who couldn't otherwise afford a scheme. You declare your gross income at enrolment and at every annual renewal; moving between bands changes your monthly contribution but not your benefits.

When you pay your monthly contribution, it splits into two streams. The 'risk' portion goes into the shared scheme pool to fund hospital claims, chronic medication, PMBs and large medical events. The 'savings' portion (on Saver and Comprehensive plans) goes into your own MSA for day-to-day claims. Hospital-only plans are 100% risk; there is no MSA on them.

An MSA is a ring-fenced account topped up monthly from a portion of your contribution. You spend it at the GP, dispensary, or optometrist, typically swiped at point of service. Three things to know: (1) unspent MSA at year-end usually rolls over to the next year; (2) legally, the MSA is YOUR money, so when you switch schemes you can transfer the balance; (3) once depleted, what happens depends on your plan: Saver plans leave you self-funded, while Comprehensive plans have an Above Threshold Benefit.

On Comprehensive plans, after you've spent your MSA there's a deliberate gap where the scheme pays nothing for day-to-day claims. Once you've spent enough of your own money to reach the Annual Threshold, the Above Threshold Benefit takes over for the rest of the year. The gap exists to discourage members from blowing through their MSA in March and expecting the scheme to fund the rest of the year.

The Annual Threshold is the total the scheme expects you to spend on day-to-day care (MSA + self-payment gap combined) before triggering Above Threshold Benefit. It's a per-beneficiary figure, set annually by each plan, and resets every January.

Once your MSA is exhausted and you've worked through the self-payment gap, the Above Threshold Benefit takes over. ATB pays at scheme rate for the rest of the calendar year, up to an annual limit. Available on Comprehensive plans only; Saver, Core, Smart and KeyCare plans have no ATB.

Each scheme sets a 'scheme rate' for every procedure and consultation: the amount it will pay in full. Doctors are free to charge more (often 200–300% of scheme rate), and you owe the difference unless your plan reimburses specialists at a higher percentage of scheme rate, or you have gap cover. Discovery calls it DHR; other schemes have their own naming (BHF tariff, Medical Aid Rate, scheme tariff).

When comparing plans you'll see specialist-rate figures like 100%, 200%, or 300%. They describe how much of the published scheme rate your plan pays in-hospital. A higher percentage means a smaller out-of-pocket shortfall when a specialist charges above scheme rate. Most specialists charge 200 to 300% of scheme rate in private hospitals, so a plan paying at 100% leaves a meaningful gap.

Schemes can apply a percentage penalty on your monthly contribution if you join after age 35 and don't have at least two years of continuous prior cover. The penalty scales with how far past 35 you are and applies permanently; there is no way to remove it later, even after years of paying. It exists to discourage healthy people from waiting until they're sick to join.

PMBs are the legal floor of medical aid cover in South Africa. Established by the Medical Schemes Act, they're a list of 271 acute conditions and 27 chronic conditions (the CDL) that every scheme must diagnose, treat, and care for in full, regardless of which plan you're on. Schemes can require you to use Designated Service Providers (DSPs) for non-emergency PMB treatment; if you go outside the DSP voluntarily, you may owe a co-payment.

The CDL is a subset of PMBs covering ongoing chronic illness. The 27 conditions include: asthma, bipolar mood disorder, bronchiectasis, cardiac failure, cardiomyopathy, chronic obstructive pulmonary disease, chronic renal disease, coronary artery disease, Crohn's disease, diabetes mellitus types 1 and 2, dysrhythmias, epilepsy, glaucoma, haemophilia, HIV/AIDS, hyperlipidaemia, hypertension, hypothyroidism, multiple sclerosis, Parkinson's disease, rheumatoid arthritis, schizophrenia, systemic lupus erythematosus, ulcerative colitis and major depressive disorder.

Cancer is a PMB, so all schemes must cover diagnosis and treatment. But schemes structure cancer cover in tiers: a primary annual limit (typically R250,000 to R500,000) covered in full, then 80% scheme rate (you pay 20%) above that limit. New treatments (immunotherapy, targeted therapy, monoclonal antibodies) fall under separate 'innovation benefits' with their own rules and co-payments.

Modern cancer treatment increasingly relies on immunotherapy, targeted therapy, and monoclonal antibodies (drugs that can cost R50,000 to R200,000 per month). These typically aren't covered in the standard oncology benefit; instead schemes ring-fence them under an 'innovation' benefit with member co-payments of 20 to 30% and tighter clinical entry criteria.

All schemes cover maternity to PMB level (basic ante-natal, delivery, post-birth complications). Higher-tier plans add: more antenatal consultations (8 vs 12), 2D/3D scans, NIPT chromosome testing, private ward cover during delivery, post-natal nurse visits, breastfeeding consultations, and 'Nurture at Home' programmes for premature or NICU babies.

Major Depressive Disorder, bipolar mood disorder and schizophrenia are CDL conditions covered on every plan. Other mental health conditions are covered as PMBs (typically 21 days of in-hospital treatment per year) plus through scheme-specific Mental Health Care Programmes. Specialist psychiatrist consultations and ongoing therapy may be paid from MSA on saver plans, or specialist benefits on comprehensive plans. Many schemes now include digital mental wellbeing programmes (CBT-based courses, telehealth coaching).

Day-to-day refers to routine medical care that doesn't require hospitalisation: GP consultations, acute scripts, dental check-ups, optometry, basic radiology and pathology. Hospital plans don't cover any of this. Saver plans cover it from your MSA. Comprehensive plans cover it from MSA, then a self-payment gap, then Above-Threshold Benefit. Plan tier dictates how much day-to-day cover you actually get.

Gap cover is a separate product (NOT medical aid) regulated under the Short-Term Insurance Act and the Demarcation Regulations. It pays the shortfall between what your scheme covers (e.g. 100% DHR) and what the specialist charges (e.g. 300%). Annual benefit limit by law: R219,845.96 (2025/26). Premiums typically R150 to R600/month per family. You MUST have an underlying medical aid; gap cover doesn't pay on its own.

A hospital cash plan pays a fixed daily amount (typically R500 to R3,000/day) for every day you're admitted, regardless of the actual treatment cost. It's regulated as insurance, not medical aid, and pays YOU directly, not the hospital. Useful as income protection while you can't work, or to help with deductibles and co-pays. Never a substitute for medical aid: a R150,000 hospital bill is not paid by R2,000/day for 5 days.

Primary Healthcare Insurance Policies (PHIPs) provide basic out-of-hospital cover: GP consultations, scripts, basic dentistry and optometry. They're regulated under short-term insurance law (not the Medical Schemes Act), don't cover PMBs, and don't substitute for medical aid for hospitalisation. Typically offered through employer or bargaining-council schemes for lower-income workers.

Schemes use co-payments to encourage cost-conscious choices. They come in several forms: (1) fixed-rand co-payments per service (e.g. R2,500 on a defined list of procedures); (2) percentage co-payments (e.g. 20% on certain non-PMB treatments); (3) out-of-network co-payments (go outside the DSP, you pay the difference); (4) procedure-specific co-pays on scopes, MRI/CT scans, and day surgery. Reading the schedule of co-payments before choosing a plan is essential; they can add thousands per event.

A DSP is a healthcare provider the scheme has negotiated rates with. By law, schemes can require members to use DSPs for non-emergency PMB treatment; go outside, you pay the difference. DSPs include hospital networks, pharmacy networks (for chronic medication), specific specialists for chronic care, and increasingly virtual primary care providers. Using DSPs is how network plans achieve their lower contributions.

Schemes require pre-auth for: planned hospital admissions, MRI/CT scans, oncology, chronic medication, certain specialist procedures, and some specialised radiology. You (or your provider) must call or submit before the treatment. In emergencies, you have 24 to 72 hours after admission. Without pre-auth, schemes typically pay only 70 to 80% of DHR or refuse cover entirely. The hospital usually triggers it but always confirm; don't assume it was done.

Two types: (1) a general 3-month waiting period, where no benefits at all (except PMBs in some cases) are paid during the first 3 months; (2) a condition-specific 12-month waiting period, where pre-existing conditions (any condition you've consulted, taken medication for, or been treated for in the 12 months before joining) are excluded for 12 months. The CMS sets the maximums; schemes apply them at enrolment based on your medical history.

A medical scheme can ask about your medical history (open-enrolment doesn't mean no questions), but by law it cannot refuse to enrol you because you have a pre-existing condition. What it can do: apply waiting periods, apply a late-joiner penalty if you're over 35 with no prior cover, and place limits on condition-specific cover for the first 12 months.

Every scheme maintains medicine formularies for both chronic and acute care. The formulary lists which specific brands and generics qualify for full cover. Going off-formulary means: full cover up to the formulary equivalent's price, and you pay the difference. Many schemes have an exceptions process; if your doctor motivates that the formulary option isn't clinically suitable, the scheme can approve full cover on the alternative.