JACQUI REED: Employers should start to consider how NHI may affect staff contracts
Employers may continue to require contributions to a medical aid to ensure complementary and additional cover is received
The National Council of Provinces adopted the National Health Insurance (NHI) Bill on December 6. The bill will now progress to President Cyril Ramaphosa for consideration.
Section 2 of the bill states that its purpose is to establish and maintain an NHI Fund that will be funded through mandatory prepayment that aim to achieve sustainable, affordable universal access to quality healthcare services by:
- Serving as the single purchaser and single payer of healthcare services, to ensure the equitable and fair distribution and use of healthcare services.
- Ensuring the sustainability of funding for healthcare services within the republic.
- Providing for equity and efficiency in funding by pooling funds and strategic purchasing of healthcare services, medicines, health goods and health-related products from accredited and contracted healthcare service providers.
Section 33 of the bill provides that once the system has been fully implemented, as determined by the health minister through regulations published in the Government Gazette, medical schemes may only offer complementary cover to services not reimbursable by the fund.
While it is evident that full implementation of the NHI may take quite some time to achieve, it is important for employers to consider the implications of the bill insofar as it affects their employees.
Certain SA employers (public and private) provide their employees with a medical aid benefit. Employers that offer this benefit generally require their employees to become members of the applicable medical fund unless they can demonstrate membership of another medical aid fund as a beneficiary.
The benefit is generally offered as part of the employee’s total cost-to-company package, deducted from their monthly remuneration and submitted to the applicable medical aid scheme. The entitlement to this benefit is a term and condition of the employee’s employment, and so may only be removed, withdrawn or amended with the employee’s consent.
Should the bill be enacted in its current form, employers will probably be required to deduct an amount from their monthly remuneration that will be payable to the NHI Fund, which is established in chapter 3 of the bill. This amount is expected to be less than what most employees are now paying towards their medical aid funds due to the benefits provided under the bill being limited, at least at its inception.
The effect of section 33 of the bill may therefore be that employers may continue to require employees to contribute to the medical aid scheme for the purposes of ensuring the employee is entitled to receive the “complementary cover”, as well as any other cover that does not fall within the remit of the NHI — anything over and above limited healthcare.
It is unclear whether these amounts (complementary cover and additional cover not within the remit of the NHI offering) will be more or less than the current payment made to the medical aid scheme.
If the amount to be paid is less, it is necessary to determine whether the employer is required to pay the employee the remaining portion of the benefit each month, and if it chooses not to do so whether that would constitute an unfair labour practice relating to the provision of a benefit. It appears that in this scenario, an employee who challenged such a reduced payment in court would succeed.
It would also be important for employees to consider whether the additional amount they are paid would increase the amount of tax they have to pay monthly. If the benefit payment would increase the tax payable, the risk may not be realised, as employees may refuse to accept the additional amount. If the amount to be paid is more, employees may object on the basis that their monthly remuneration is in effect being reduced.
A term and condition of employment may not be changed in the absence of an employee’s consent. If a benefit is changed without consent, it may constitute a unilateral change to terms and conditions of employment, which may be challenged with a referral to the Commission for Conciliation, Mediation & Arbitration on the basis that the employer’s conduct constitutes an unfair labour practice regarding the provision of a benefit.
The employer may seek to argue that the change is a legal requirement with which they are obliged to comply, and that unless they do so they will be penalised. The employee may argue that the employer ought to absorb the additional costs, and that the employee should not be penalised financially. It remains to be seen which party will succeed on that score.
Stakeholders have indicated that the ramifications of the bill, if enacted in its current form, will be severe for South Africans in general, and particularly for medical schemes and medical practitioners. It is unclear whether private medical care will remain an option for those who are able to afford it.
If private healthcare is available but the costs are prohibitive, employers may be in a position to justify amendments to the benefit and not introducing an equivalent benefit (which may not be available).
Employers are encouraged to start considering the ramifications of the enactment of the bill on the benefits offered to employees to avoid possible conflict in future.
• Reed is an employment lawyer with Herbert Smith Freehills.
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