Draft Demarcation Regulations

The Council for Medical Schemes and the Dept. of Health, have issued a media statement: Circular 79 of 2016, which concerns the Draft Demarcation Regulations.

The media statement provides a summary of the draft Regulations, the consultation process, amendment of the definition of the “business of a medical scheme” and implementation timelines, with the implementation on 1 April 2017.

No doubt all Medical Gap policy providers will be looking at their products in relation to this Circular… so we can expect to hear more in the media and from providers soon (as you know Discovery Health have already delayed the selling of their new gap product).


Excerpt from the media statement below:

The Regulations are the outcome of a consultative process between the Ministers of Finance and Health as well as the Council for Medical Schemes (CMS) and the Financial Services Board (FSB).

The first draft Regulations were published for public comment in March 2012, and revised after taking into account public comments. The second draft Regulations were published for public comment in April 2014. The draft Regulations published today are therefore the third revised draft Regulations, which will be finalised and gazetted after taking account of the required parliamentary process, expected to be in early December 2016. It is intended that the final Regulations will take effect from 1 April 2017.

Three categories of health insurance products are of particular relevance to the abovementioned demarcation, namely:

Medical Expense Shortfall policies (Gap cover plans): These policies cover the shortfall between medical scheme benefits and the rates that private medical service providers may charge.

Non-medical expense cover as a result of hospitalisation policies (Hospital cash plans): These policies pay out a stated benefit upon hospitalisation, usually per day spent in hospital. The stated benefit is unrelated to the actual cost of any medical service as it is aimed at covering incidental costs, such as loss of income.

Primary healthcare insurance policies: These policies provide limited medical service benefits (often to employee groups or bargaining councils) including services such as general practitioner visits, acute and chronic medication, emergency medical care, dentistry and optometry.

The draft Regulations allow insurers to continue to provide Medical Expense Shortfall policies (Gap cover plans) and Non-medical expense cover as a result of hospitalisation policies (Hospital cash plans) in a manner that complements medical schemes, subject to strict underwriting and marketing conditions.

The draft Regulations do not allow insurers to continue to provide Primary healthcare insurance policies. These types of benefits will, going forward, have to be provided in accordance with the MSA. In this regard, the Minister of Health has requested that the CMS grant a two year exemption, subject to certain conditions, for primary healthcare insurance policies, while further research is being led by the Department of Health into the development of a Low Cost Benefit Option (LCBO) guideline. It is envisaged that the existing primary healthcare insurance policies will be required to transition into a LCBO framework once finalised.

If you would like to read the full statement (3 pages), download here: Draft Demarcation Regulations Oct 2016

Draft Demarcation Regulations was last modified: November 11th, 2016 by Kenny Williamson

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