A company medical aid is any medical scheme cover subsidised by the employer. Sometimes this is cover on a restricted or closed medical aid which is only available to employees of a specific company or sector of industry. At other times, employers may subsidise monthly medical aid contributions for their employees on open medical aids.
Employers are not obliged to subsidise medical aid cover for their employees and this perk should not be confused with other mandatory benefits like UIF (unemployment insurance fund).
Advantages of a Company Medical Aid
A true company medical aid is one which is restricted and only employees of the company can join. This is a costly exercise so usually businesses and unions of a specific sector of industry band together to offer a restricted medical aid only to their employees and members. These medical aids are not open to the general public and in these cases, employers are prepared to subsidise larger portions of the monthly medial aid contributions.
This means that the employee is able to get better medical aid cover at a lower price. However, if an employee is retrenched, the medical aid cover can fall away – medical aids may keep the redundant employee on the medical aid for up to one year but the entire medical aid premium needs to be paid for by the individual and the employer will not make any part contribution.
Employer Medical Aid Contributions
Since employers are not obliged to contribute towards the monthly medical aid premiums of an employee, the subsidised amount can vary. Most employer’s cover up to 30% of the monthly contributions but this can be higher or lower depending on the individual company.
In an instance where a package is offered to an employee with the cost to company (CTC) clearly defined, it is unlikely that an employee can expect any medical aid subsidy. Paying for the cost of the medical aid is therefore entirely up to the employee.
Employee Medical Aid Cover
Company medical aids offer the same medical benefits as any medical aid although the monthly contributions of the main member may be lower due to the employer’s subsidy. There are usually no special concessions and you may still have a 3 month waiting period before the medical aid benefits are active. Pre-existing medical conditions will not be paid for in the first 12 months of cover.
Employees are not obliged to stay on the company medical aid. However, the employer may not agree to fund another medical aid of the employer’s choice especially if the company medical aid is a restricted plan. Dropping your company medical aid cover due to financial constraints does not mean that the employee will receive the employer’s share of contribution. Considering that an employee also gets a small tax benefit for their medical aid contributions, terminating your subsidised medical aid membership to save money may not be as viable as one would think.
If you are trying to save on your monthly medical aid costs and are currently receiving a subsidy from your employer, it may be better to consider a hospital plan within the same medical aid. Always speak to your employer and an accredited medical aid broker before making any changes to your medical aid cover.