Medical Aids and Late-Joiner Penalties

Many South Africans are not aware of these “fines” which schemes lay on those who joins a medical scheme late in their life. The downside of these penalties are that they are not a once-off fine, but a something a member must pay for as long as they have a medical aid.

A late-joiner penalty is something that a member will pay literally for the rest of their life while being a member of a medical scheme. When you apply at a certain age for a medical aid, your premium is higher than the regular member who joined the medical scheme earlier and opted for the same option. It comes as a shock to many South Africans and many has unfortunately learned the hard way.

In Regulation 13 of the Medical Schemes Act (131 of 1998) a formula is endorsed to determine the penalty amount. The penalty can range anything from 5% to 75% more on the member’s premium. The late-joiner penalty normally applies for members 35 years or older.

Now the big question probably on your lips: ‘How the hell can a medical scheme get away with it?’

I recently read an article that explained it very well.

A members’ age range from 21 years to 75+ years. As we all know a younger person that participates in sport and leads an active lifestyles are often healthier than a person who is 75 years old. The result is that the young person, let’s says 25 years often claims. However an older person of 75+ years claims more regularly not to mention chronic medication and regular visits to the doctor. In other words, members that get sick more often are subsidised by premiums from younger people who are less demanding.

As young people get older and sicker, their medical costs are then subsidised by the younger generation who joins the medical scheme.

A healthy investment is where a scheme’s income exceeds the expenses. The contributions made by a member are an investment in a healthier future just as a pension fund is an investment in your retirement. When an older person applies for a pension funds their contribution is much higher than a younger person’s. The reason is that the amount invested in the pension fund has to justify his monthly payout amount (salary). This is the same for a medical scheme.

Thereby a person who joins late spoils the benefits of other members in the scheme who pay their premiums as is expected of them.

How is this late-joiner penalty calculated?

The formula depends on two things: the age of the member’s age at the date of joining a medical scheme and the number of credible years that a person was a member or a dependent of a medical fund. The period, which a member was a dependent of his/her parent’s medical scheme, is excluded from this formula. This is usually the first 21 years of the member’s life.

Answer = age of member at date of application – (35 + years as a credible member of a medical scheme)

The answer is then combined with a table:

  • 0-4 years: 5% of contribution
  • 5-14 years: 25% of contribution
  • 15-24 years: 50% of contribution
  • 25 + years: 75% of contribution


Peter was a dependent of his parents’ medical aid until the age of 23 years after which he was a member for 5 years at his own medical scheme. After that time he went overseas to work for a company. During the 25 years he worked for the company he was a member of a medical fund that belongs to the company. After 25 years, he returned to South Africa and applied for a medical scheme at the age of 53.

Credible coverage is then calculated as: 23-21 = 1 year as a dependent of his parents’ medical scheme + 5 years as a member of his own medical scheme. The time Peter was younger than 21 are not calculated. The 25 years he was part of the overseas company’s medical scheme is also not counted, although he has evidence of his contributions.

So his credibility cover is then 7 years.

The formula:

A = 53 (current age) – [35 + 7 (credible coverage)] = 11

According to the table Peter falls in 5-14 years bracket and therefore he will pay 25% more than an ordinary member.

The situation regarding the membership of overseas medical schemes is under contemplation and under investigation. It is very hard to determine the member’s health status at an overseas doctor. It is also important to note that the responsibility lies with the medical scheme enforce the penalty. Some schemes enforce it strictly, while others don’t.

I hope this information provides a reasonable idea of late-joiner penalty and the costs involved and how it may affect your wallet when you decide to apply for a medical scheme at a later stage.