While medical schemes typically won’t refuse you as a new join, they can insist that you pay a late joiner penalty fee. You may be sighing at the mere thought because medical aid fees are already expensive as is. So, what is a late joiner penalty fee, and why do you have to pay it?

In the past the Medical Schemes Act of 1988 allowed for schemes to refuse members based on their age, health status or membership history, for example. This clause has since been done away with and schemes can now simply evoke a penalisation fee for ‘joining late’. In addition, high risk joiners are also placed under an exclusion period. This means that you are not able to claim for a certain treatment or condition for a specific fixed time period.

You may still be wondering how Medical schemes justify this fee. Well, the answer lies in the fact that Medical schemes would go under if there weren’t enough young and healthy members joining. If everyone waited to join when they were old and sickly, they are more likely to need more expensive medical care as a result of potentially neglecting their health in the lead up. This would mean that the scheme would be forking out far more money than they would be getting in.

So, how are late joiner penalties decided?

The penalty is dependent on different aspects such as the number of years the potential joiner belonged to a scheme, the number of years they didn’t and age, as always, plays a role too. Typically schemes only impose a late joiner fee to those 35 and over.

To make it that much clearer, the following is a formula schemes use to calculate the penalty fee.

Applicant’s current age + years of previous cover = the total number of years uncovered.

A percentage is then obtained from the above calculation and applied through the following bands:

1-4 years uncovered = 5 % of the total contribution amount
5-14 years uncovered = 25% of total contribution
15-24 years = 50% of total contribution
25 years or more = 75% of total contribution

The penalty is thus calculated as a percentage of the joiner’s basic contribution. Simply put, the longer the applicant was without medical aid, the higher the penalty amount.

Important to note is that an overseas membership to a medical aid does not apply nor does any as a dependent below the age of 21.