An employer’s guide to medical aids

Employers aren’t obligated to subsidise their employees’ medical aid contributions, however, it would be beneficial to the employee. Employers may decide to integrate the total cost of benefits into the cost-to-company  remuneration package. These benefits could include medical aid, pension fund contributions, and travel allowance to employees.

Selecting the best medical aid scheme for employees

When subsidising employees’ medical aid, a single medical aid provider may cut down on red tape and simplify the payment procedure. Pay attention to the financial indices which will reveal whether the provider will be able to pay claims, especially when looking at the cheapest medical aid scheme. Focus areas to look at for any medical aid provider would be their cash reserves, average age of beneficiaries, Independent global credit ratings and solvency ratios.

Medical aid options available to employees

An employer may decide to have an open medical aid scheme or a restricted one for their employees. Restricted medical aid schemes are policies which only include the employees in your company. Barloworld Medical Scheme and Pick n Pay Medical Aid Scheme only provide company-specific schemes. Other examples of restricted medical aid schemes are that of GEMS and Profmed, which only provide healthcare benefits to government employees and graduate professionals. However, open medical aid schemes are available to all members of the public such as Bonitas, Discovery Health and Fedhealth.

How an employer contributes to medical aid schemes

Employers may contribute a percentage of their employees’ medical aid contributions to their medical aid scheme. While some employers choose to contribute to an employee’s medical aid scheme, others may offer full remuneration packages. These are known as cost-to-company packages which comprise the total cost of benefits such as medical aid contributions and travel allowances. However, in this case the onus would be on the employee to contribute to their medical aid provider. In addition to this, should there be any increase in premiums that are above the inflation rate, the employee will have to cover the cost, not the employer.

Medical aid subsidies

Not all employers are in a financial position to make provision for employees company-specific medical aid scheme. Employers may partially subsidise employee contributions to an open medical aid scheme if they so chose. They may also choose a specific medical aid provider of their choice or restrict membership to a particular open medical aid scheme. By law the employer is free to choose any amount they want to contribute toward their employees’ medical aid cover. These rates generally range from 30% to 50% of employees’ monthly premiums. At no point would the employer be liable for any shortfall in this regard. The employee may decide whether or not they accept the terms or conditions or not.

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