Q&A: Is the late-joiner penalty for my mom’s medical aid fair?
Proof of previous scheme membership is important
Question: I am currently working for a Netcare hospital. I have worked for this hospital before and resigned. I went on to work for two other Netcare hospitals and for the first time included my mother on my medical scheme as she was retired. I did that without any hassle.
In 2016, I was re-employed at this hospital and a few months later I added my mother to my medical scheme. For the first few months, I noticed I was being charged a penalty fee, which I didn’t mind, but then I realised it was being done continuously.
When I asked the HR department about the penalty I was told it’s a late-joiner penalty and is going to be deducted for as long as my mother is on my medical scheme.
I think it’s unfair as it is not a small amount. At the moment I’m paying over R4,000 for my monthly medical scheme contributions and an extra R1,000 for the penalty fee.
Unfortunately, I can’t take my mother off the medical scheme as she is a pensioner and lives alone. — Motshewa Motsumi
Answer: Jacqui Nel, health-care business unit head at Aon Employee Benefits, replies:
You, as the member, need to send your current medical scheme proof of your mother’s previous membership of a scheme. This would be called a certificate of membership. In terms of the law, a medical scheme may charge a late-joiner penalty if a member joins or a beneficiary is added after the age of 35 without proof of membership of a scheme for the years since age 35.
To calculate the penalty applicable, the scheme will take your current age and deduct 35 years (the age from which the late-joiner penalty can be applied) and any years when you were a member of a scheme (known as creditable coverage).
So in your mother’s case: current age 65, less age 35, equals 30. From this you should deduct the years your mom was on a medical scheme.
So, for example, if your mother had 15 years’ cover on a medical scheme, her late-joiner penalty will be based on the remaining uncovered 15 years.
Schemes have the discretion to apply late-joiner penalties. If your mother was added at the time you joined your current employer, the penalty may have been waived. However, if you added your mom later, the scheme would have been more likely to apply the penalty.