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Circular 28 of 2020: COVID-19 Medical Schemes Industry Guidelines

The Council for Medical Schemes (CMS) is implementing measures within the ambit of the Medical Schemes Act to assist medical schemes to adapt to the adverse effect of the coronavirus pandemic, which threatens their liquidity and by extension, the ability of schemes to pay claims.

The just released Circular 28 of 2020 provides comprehensive guidelines for medical schemes as well as members and focusses on the following:

1. Contribution holidays
2. Financial relief to members
a. Use of accumulated savings funds to offset contributions
b. Ex-gratia payments to offset contributions
c. Considerations for Medical schemes when dealing with financial relief applications
3. Blanket exemptions to medical schemes and their members
4. Approach and criteria for section 26(7) exemption considerations
5. Annual general meetings and elections
6. Stakeholder engagement
7. Promulgation of coronavirus as part of the PMBs

The CMS anticipates that the lockdown will not last more than three months and therefore, the period of exemption should be consistent with this. This period may be extended as guided by the Disaster Management Act (DMA) regulations, but the most important consideration to these exemptions is the individual scheme’s ability to self-sustain beyond the exempted three months, if approved. It needs to be noted that each exemption application will be assessed on its own merits and schemes seeking exemption from the Act or their registered rules in terms of section 8(h) must provide proof of exceptional circumstances.

The approach and criteria for section 26(7) exemption consideration will be based on the following:

No blanket exemption application will be considered
Each exemption application will be subjected to a set of defined criteria
Each case will be treated on its merits
The exemption period covered will not extend beyond three months, subject to review as guided by the DMA regulations
Appropriate classification of exemption application (Individual relief, Employer Relief, Scheme Relief, Service Provider Relief)
Impact on the following measures will be considered:
Reserve levels (% and Actual Rand terms)
Solvency levels
Member benefits and interests/ Complaints
BOT’s role in ensuring member interests are protected
Compliance with another regulators legislation
CMS’s role in monitoring the contracts that will be used to implement these interventions
CMS’s accreditation standards, Act and Regulations

The CMS will not approve any exemption application that demonstrates potential adverse effects on members. The CMS is committed to ensuring that no medical scheme member is left without full comprehensive cover, consistent with their chosen benefit package as per Circular 25 of 2020.

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