Constitutional Court Judgement: Genesis Medical Scheme
On 8 June a Press Release was issued by the Council for Medical Schemes, referring to the Court Judgement on the appeal matter between Genesis Medical Scheme and the Registrar of Medical Schemes and the Council for Medical Schemes.
On 6 June 2017 a ruling was passed, in favour of Genesis Medical Scheme, that funds contained in the members’ savings accounts on their medical scheme, can now be considered as scheme assets.
Important to know:
- Members will still have control over their medical savings accounts.
- Accumulated savings will still be paid out if a member resigns from the scheme, or transferred to the new scheme in the event of a change to another scheme.
- A positive implication of this ruling is that a scheme solvency ratio will be improved due to the inclusion of these funds, which ultimately could reduce pressure on increases for schemes where a percentage of the annual increases is factored in to grow the solvency.
- Furthermore, schemes will now be able to invest some of these funds in higher returning investments, again reducing the pressure on annual increases.
- In the event of the liquidation of a scheme, these funds are considered scheme assets and would not be available to members.
The People Company continuously monitors the solvency ratio and scheme demographics of medical schemes. Our clients can rest assured that in the event of a scheme being faced with possible liquidation, alternative arrangements would have been made for our members before the event, to ensure that our members are not prejudiced in any way.
Acting Registrar for the Council for Medical Schemes, Dr Sipho Kabane, stated in the press release: “Our focus is clear as the regulator of the medical schemes industry – and we will continue to give effect to the Medical Schemes Act, N0 131 of 1998. We have a duty to protect the interests of members of medical schemes, and to ensure that the industry is stable.”
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