Updated · General information, not advice · TitanDC
Why the penalty exists
Open medical schemes must accept you regardless of your health, and may not charge you more because you are ill. That only works if people do not simply wait until they need care before joining. The late-joiner penalty is the counterweight, set in regulation under the Medical Schemes Act.
- Open schemes cannot refuse you, and no scheme may rate your contribution by health status
- Without a counterweight, joining late would be rational and the pool would fail
- The penalty applies from age 35, based on years of missing cover
- It is a percentage added to the risk portion of your contribution
How the bands work
The calculation counts your age at joining, subtracts 35, and subtracts the years of creditable previous membership you can prove. The result places you in a band, and each band carries a maximum percentage that rises with the gap.
- Age at application, less 35, less years of creditable cover: a result of zero or less means no penalty
- Maximum loading — one to four penalty years: 5%. Five to fourteen: 25%. Fifteen to twenty-four: 50%. Twenty-five or more: 75%
- The loading applies to the risk portion of your contribution, not to a medical savings account; ask the scheme to show the rand amount and the cover it credited
- It does not expire, and a new scheme may continue to apply it; a scheme may also charge less than the maximum
What counts as creditable membership
This is where people either avoid the penalty or wear it unnecessarily. Proof matters, and old certificates are worth finding.
- Previous membership of a registered South African medical scheme, as a member or as an adult dependant
- Time as a dependant before the age of 21 does NOT count: the regulations exclude it, so a childhood on a parent’s scheme earns no credit
- Adult membership counts even if it was before you turned 35
- If you have been continuously covered since before 1 April 2001, with no break longer than three consecutive months, you are not a late joiner at all
- Cover outside South Africa does not count
- Hospital cash plans and gap cover are NOT medical schemes and do not count
- Ask former schemes for a certificate of membership — the burden of proof is yours
- If reasonable efforts to get the documents fail, the regulations allow a sworn affidavit setting out your periods of membership
What to do if you are facing one
The penalty is calculated from facts, and facts can be checked. These steps occasionally remove it and frequently reduce it.
- Gather certificates from every scheme you belonged to, including as an adult dependant on a spouse’s or parent’s membership
- Check whether you were a registered adult dependant, from age 21, during years you had forgotten
- Ask the scheme in writing how the penalty was calculated and which years it counted
- If the calculation is wrong, dispute it with the scheme, then the Council for Medical Schemes
- Weigh the penalty against the cost of having no scheme at all — the penalty is a surcharge, while no cover is unlimited exposure
Common questions
At what age does a late-joiner penalty apply?+
From age 35. The calculation looks at your age when you join, less 35, less the years of creditable previous medical scheme membership you can prove.
Is a late-joiner penalty permanent?+
It does not expire. It applies for as long as you are a member, and if you move, the new scheme may continue to apply it. The regulated percentages are maximums, so a scheme may charge less; ask for its calculation in writing.
Does gap cover count as previous membership?+
No. Gap cover is an insurance policy rather than a medical scheme, so it does not count as creditable membership. Nor do hospital cash plans.
Does being a dependant on my parents’ scheme count?+
Only from age 21. The regulations exclude any period as a dependant under 21, so a childhood on a parent’s scheme earns no credit. Cover as an adult dependant, on a parent’s or a spouse’s membership, does count and is worth proving, because it can move you into a lower band or out of the penalty entirely.
Can I dispute the penalty?+
Yes. Ask the scheme in writing to show how it was calculated and which years it credited. If you can evidence membership it did not count, the scheme should recalculate. Unresolved disputes can be taken to the Council for Medical Schemes.
Sources
This page cites the legislation and regulators it relies on, so you can check it.
General information about medical scheme late-joiner penalties in South Africa, not advice. Bands, percentages and what counts as creditable membership are set by regulation and change over time. TitanDC is an authorised financial services provider, FSP 8972.