Picking a new plan partway through the year is usually not allowed. As medical costs continue to rise, the last thing you want is to find out that you are on the wrong medical scheme plan. But, depending on the rules of your scheme, you may not be able to change medical scheme options partway through the year, says Damian McHugh, executive head of sales and marketing at Momentum Health. When considering a change of medical aid cover, it might mean moving between schemes — from Momentum to Discovery, for example — or staying with the same medical scheme and changing your plan or option — such as moving from Discovery’s Coastal Core plan to the Classic Saver plan. The main reason for limiting when members can change options is to prevent the practice whereby “everyone stays on the cheapest option and when they get sick, they jump onto the highest plan. That’s like only buying insurance after you crash your car,” says McHugh. “So most medical schemes are likely to say no if you want to move from one plan to another within a year. “In October or November, you can choose your scheme and plan for the following year, and then you can’t change until the following year,” he says. Jill Larkan, the head of health-care consulting at financial services company GTC, says you may realise you are on the wrong plan when: • You reach the middle of the year and find you have a huge balance in your savings and you are paying a large medical aid premium every month. In this case, you are probably on an expensive plan even though you don’t have many health-care needs; • Your finances are taking strain and you need to find cheaper cover. This is probably relevant for many medical aid members right now; • You are facing a future medical or hospital event and realise you are on a plan with few benefits (for example, a hospital plan) when you actually need one with much higher benefits (for example, a comprehensive plan); or • You have a chronic condition or a severe illness, such as cancer, and your current benefits don’t match up to your treatment requirements. TOWARDS YEAR-END YOU CAN CHANGE OR KEEP YOUR PLAN FOR THE FOLLOWING YEAR Larkan notes that some medical schemes are more flexible. For example, Fedhealth will allow you to change your plan within the scheme within 30 days of a life-changing event, such as marriage of the main member, pregnancy or the diagnosis of a dread disease, like cancer, diabetes or HIV/Aids. “Discovery Health will allow you to downgrade if it is due to a reason such as death or divorce, where the premium or benefit level is simply no longer required. Discovery may also allow you to downgrade to a lesser plan if, for example, you decide you can use a lower-cost plan and you want to redirect the money you save on contributions towards a Discovery retirement annuity,” she says. However, she notes that there are set parameters for such downgrades. For example, if you are currently on a network plan that means you are restricted to a specific network of doctors and/or hospitals, you cannot “change to a plan that allows freedom of choice in hospital selection. “You will be required to stick within the original choice of plan network limitations,” Larkan says. Considerations when deciding to switch Changing to a medical scheme other than that recommended by your employer may mean your employer is unlikely to continue to pay your medical scheme subsidy, which will increase your contributions greatly. If you switch partway through the year, your benefits may be calculated from the date of joining the new option or scheme. For example, says Bianca Viljoen, spokesperson for Health Squared Medical Scheme, the new plan may have a R500,000 limit for cancer, but if you switch at the end of June, you will only be able to access 50% or R250,000. “You would have proportionately lower benefit limits for the remainder of the year,” she says. If you have pre-existing conditions such as asthma or cardiac issues, the new medical scheme is allowed by law to provide three underwriting conditions: 1. A three-month general waiting period where no claims are covered except the prescribed minimum benefits (PMBs) and chronic medicines. Note that your chronic medicines might be covered but the new medical scheme might pay for a different product. 2. A 12-month, condition-specific waiting period if you have pre-existing conditions such as cholesterol, for example. The new scheme may not cover any costs related to that condition for a year. This waiting period can only be applied if you have not been a member of a scheme for 24 months or if you don’t join a new scheme within three months. 3. A late joiner penalty — this only applies if you did not previously belong to a medical scheme and are 35 or older. The late joiner penalty is percentage-based on a sliding scale, depending on how old you are and for how long you had no medical aid after 35. Damian McHugh, executive head of sales and marketing at Momentum Health, says you can switch from one medical scheme to another halfway through the year if you are self-employed or your company gives you a choice of schemes. He says applying to a new medical scheme costs you nothing. “My recommendation would be to fill out the form and see what the new medical scheme comes back with. If they impose restrictions, you are under no obligation to move just because you applied to a scheme. “Don’t cancel your existing medical scheme cover until you have made a final decision,” he says. Please contact Tammy in our Health Department, email health@daberistic.com,to find out about different Medical aid options Source: Business Live
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The Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA), in a statement say they have reached an understanding with non-life insurers that are most affected by business interruption cover claims that they will consider interim relief to their policyholders who have the appropriate contagious disease extension, while legal certainty on this matter is being sought from the courts. The interim relief will take the form of once-off payments to policyholders to enable them to continue running their businesses while awaiting the outcome of the legal process. This arrangement follows discussions between the authorities and the non-life insurers. The discussions were primarily aimed at addressing two main issues which are of concern to the FSCA. The first is the impact of the repudiation of contingency business interruption cover claims by some non-life insurers (and delays in processing policyholders’ claims) and the second is the impact of this matter on the reputation of the non-life insurance industry, the statement says. The authorities say they acknowledged in previous communications that business interruption cover is a complex issue. There are different business interruption policies. Those that have an extension for infectious/contagious diseases and the latter constitute approximately 3 to 5% of the policies. The FSCA says it is its view that claims in respect of cover with an extension for infectious/diseases in terms of these policies should be honoured where they meet the terms of the contract and that lockdown should not be used as a ground to repudiate these claims. This approach has also been adopted by some international conduct regulators but is being challenged by insurers and reinsurers globally and locally, which means that legal certainty will have to be obtained from the courts. The legal certainty will undoubtedly take time to achieve, with dire consequences for policyholders who have already been impacted severely by Covid-19 and the national lockdown, and it is in their interest that the authorities and the affected non-life insurers have reached understanding that interim relief payments should be made. The interim relief to be provided by non-life insurers will differ from case to case depending on reinsurer support, financial impact and the number and types of policyholders. The FSCA and PA say they have established the following guiding principles to be applied in determining the interim relief: The interim relief should at the very least focus on those businesses most impacted by lockdown (for example, the hospitality industry) and also on small businesses; The funds provided to a policyholder as interim relief shall not be claimed back by any non-life insurer from a policyholder should the courts decide in favour of insurers. However, should the courts find in favour of policyholders, these funds will be deducted from the total claim amount payable to a policyholder by a non-life insurer; and This relief should be on either an interim basis pending legal certainty or if non-life insurers wish to offer a full and final settlement, such settlement should reflect reasonable value to a policyholder and the implications thereof should be clearly explained in writing should a policyholder wish to accept the settlement on this basis. The authorities support the relief measures that will be provided by many of the non-life insurers that offer business interruption with the extension for infectious/diseases in line with these principles and view them as a necessary and appropriate interim response to the current situation, particularly when one considers that the said non-life insurers are providing financial relief to their policyholders without the support of their reinsurers at this stage. The exact details of relief measures by insurers to their policyholders will be communicated directly by each insurer to their brokers and policyholders. ADVERTISING The authorities say they have agreed with the most affected non-life insurers that, despite the time-barring clauses in the business interruption policies, non-life insurers would not raise the defence of prescription should policyholders decide to lodge court actions against non-life insurers at a later stage. For reinsurance purposes, non-life insurers may require policyholders to lodge their claims before certain dates and the authorities request policyholders, their brokers and legal representatives to co-operate with non-life insurers in this regard. “The authorities will continue to work with non-life insurers that are most affected by these business interruption cover claims to ensure that claims are resolved as quickly as possible and that trust and confidence in the non-life insurance industry can be restored. The efforts by these insurers to provide interim relief to their policyholders with no intention of claiming the funds back from their policyholders is appreciated by the authorities,” the statement says. If you would like to get a quote for your Business insurance contact Edmond and Marizka in our Short-term department email shortterm@daberistic.com, tel (011)658-1333 Source: Personal Finance June proved to be another positive month for global markets, as investors’ appetite for risk continued to increase despite concerns around the spread of Covid-19 in emerging markets as well as a new spike in cases in the United States. Emerging market equities were the largest beneficiary of the risk on environment, benefiting from the unprecedented fiscal stimulus announced by governments and central banks across the globe. Global equity markets (and US technology shares in particular), delivered strong returns during the month, despite continued growth in Covid-19 cases across the globe and the announcement of new lockdown measures in some cases. Source: Morningstar South African Market Update South African equities benefited from the increase in investor risk appetite, with the local equity market delivering strong performance during the month. The strong performance was mostly broad based and was largely driven by the gold miners and Naspers, however, banks continued to underperform the broader market. Local bonds ended the month marginally lower after a very strong April and May, as the worsening fiscal position of the country was highlighted in the supplementary budget delivered towards the end of the month. Local listed property rebounded strongly in the month, recovering some lost ground despite continued concerns around rental collections and balance sheet risks posed by ever increasing loan to value ratios. The rand was largely stronger against most major currencies during the month, showing signs of stabilising following significant depreciation since the beginning of the year. South African Economic Update Finance Minister Tito Mboweni delivered the supplementary budget towards the end of June, providing an update on the state of the country’s finances along with government’s intentions to reduce debt to a more sustainable level. While the content of the supplementary budget was generally well received, it was rather light on specific details, with many commentators highlighting the fact that implementation risk remains relatively high. The Q1 2020 GDP figure was announced during the month, which showed a 2% decline in growth, deepening the recession in SA following two consecutive quarters of negative growth in the second half of 2019. SA headline CPI fell to a year-on-year figure of 3% to the end of April, its lowest level since June 2005, largely driven by lower fuel and transport prices. In positive news, May’s trade balance came in at a surplus of just under R16 billion, as exports dramatically increased by 96% month-on-month, while imports declined by 2% month-on-month. Chart of the month: The recovery in the US equity market since the end of March 2020 has been largely driven by the performance of Facebook, Amazon, Apple, Microsoft and Google: See below for a summary of the key market movements for the month of June:
• The JSE All Share Index (+7.7%) delivered strong performance during the month, supported by strong returns from large index constituents and resources counters. • All local equity sectors delivered strong returns, however, Resources (+8.8%) fared better than both Industrials (+8.3%) and Financials (+4.2%). • Listed property (+13.4%) had its best month in over a decade, largely driven by strong performance from Redefine (+72%) following the company entering discussions to sell part of its business. • Local bonds (-1.2%) ended the month lower, as yields moved higher (moving prices lower) following the announcement of the precarious fiscal position of SA as highlighted in the supplementary budget. • Cash delivered a stable return of +0.4% for the month. • Most major developed equity markets ended the month higher, as investors reacted positively to announcements of fiscal support from global governments and central banks. The MSCI World Index delivered a return of +2.7% for the month. • Emerging market equities were the major beneficiary of the risk on environment, outperforming developed markets over the month. The MSCI Emerging Markets Index delivered a return of +7.4% for the month. • Most major equity markets ended the month with positive returns, with Germany’s FSE DAX (+7.3%), China’s Shanghai SE Composite (+5.7%), Japan’s Nikkei 225 (+1.9%) and the UK’s FTSE 100 (+1.6%) all ending the month higher. • US equities also ended the month higher, with the technology heavy NASDAQ 100 (+6.4%) and the S&P 500 (+2.0%) both ending the month with positive returns. • In terms of the major commodities, Oil (+16.5%) ended the month higher, however, the price of brent crude is still down -37.7% year-to-date. Gold (+2.3%) ended the month higher, while Platinum (-1.3%) ended the month slightly lower. • The rand was slightly stronger against most major developed market currencies for the month. The rand appreciated against the pound sterling (+1.5%), the US dollar (+1.5%) and the euro (+0.5%) during the month. *All data is sourced from Morningstar Direct as at 30/06/2020. The performance of South African asset classes is quoted in rands and the performance of global asset classes is quoted in US dollars. Source: Morningstar All South African medical schemes are now regulated to cover the Covid- 19 as a PMB condition. Below is how Momentum & Discovery will cover their members. Discovery Members Members can do 2 tests per Annum Members will follow the below process:
Payment decision on the WHO Global Outbreak Benefit Discovery designed the WHO Global Outbreak Benefit to respond to global health emergencies, such as the COVID-19 virus. What the WHO Global Outbreak Benefit is The WHO Global Outbreak Benefit covers the out-of-hospital management and appropriate supportive treatment of global World Health Organisation (WHO) recognised disease outbreaks and out-of-hospital healthcare services related to COVID-19. This benefit offers cover for the Prescribed Minimum Benefits (PMB) as well as additional cover, and does not affect your day-to-day benefits as long as it meets the Scheme’s benefit entry criteria. Your benefit confirmation Use of the relevant networks as per your chosen health plan will apply for healthcare services paid from the WHO Global Outbreak Benefit. The benefits covered from the WHO Global Outbreak Benefit are outlined below: Healthcare services not covered by the WHO Global Outbreak Benefit will pay from available day-to-day benefits, depending on your Discovery Health Medical Scheme plan.
Momentum members.
In the Business Beyond Covid series, CEOs and other business leaders and experts in their sectors look to the future after Covid-19. What effect has the pandemic and resulting lockdown had on their industries and SA economy as a whole, which parts will bounce back first and which will never be the same again? Most importantly, they try to answer the question: where to from here? The Covid-19 pandemic has swept the world like a firestorm, resulting in a shell-shocked global economy and frayed social fabric. Just one thing is certain as we look to a future beyond lockdowns: this crisis will bring about lasting structural changes about which we can only guess. We are firm believers in the importance of staying invested through market cycles, even when it feels uncomfortable. Market volatility is one of the few reliable things you can predict in the investment world; you don’t know what prices are going to do next month or next year. All we know is that prices are going to move about, often more than the investment fundamentals and underlying cash flows of the asset classes. Saying that we’re living in volatile times right now is an understatement. In March, the first wave of the pandemic hitting many countries coincided with an oil war between Saudi Arabia and Russia, causing a collapse in the oil price, a global markets liquidity crunch and in SA a ratings downgrade. Together, these caused a sharp contraction in the markets in March, but by April we were already seeing a market recovery. And while many economists are predicting a global recession, it’s important to remember that stock markets are not the economy; the market always looks forward and through the noise. What will the investment sector look like post-pandemic? The immediate impact will be felt by small and medium enterprises (SMEs) operating in the sectors most affected by the lockdown, with resulting unemployment. There will be casualties and business closures, but many companies will survive and emerge stronger as they adapt their businesses to the new world. We will also see new businesses and industries rise as a result of market demands associated with the new world. It is all about adapting to new markets and realities, and doing what is necessary to stay relevant and alive. From an investment perspective, in times of market volatility mispricing occurs, providing investors with opportunities to buy quality businesses at attractive prices. For investors we believe that while the economic environment will be much tougher, we’re going to see an increase in the willingness to save and the importance of having these savings for uncertain times. There will be a shift in the way we spend our income, with a greater awareness of our discretionary spend. This will be a good outcome as South Africans have traditionally been undersaved, and regardless of income most live from month to month. We’re going to see far less comfort in the traditional concept of a job. Many people have had a false sense of security about earning salaries and are permanently employed. This pandemic has shown how quickly that perceived safety net can be whisked away. We are all more vulnerable than we ever imagined. We can expect to see people looking to diversify their income streams to build up their savings pool. The psychological effects on investors will vary and the role of the financial adviser in a post-Covid world will become critical. The big shift we are going to see is a greater focus on the role of the adviser as a behavioural coach and providing holistic financial advice. Their most important role in a post-Covid world will be to help their clients avoid emotional decisions and not overreact during periods of market volatility. They should be steering people away from selling out their investments at the bottom. Helping them stay the course, stay focused on their financial plans and stick to their goals at a time when their income and spending patterns may have changed. One of our concerns is that the psychological effect of the pandemic will put a dent in SA's legendary entrepreneurial spirit. We worry that the lasting scars will make our small business owners and investors more cautious and less willing to take chances and restart. Hopefully our unquenchable optimism will shine through and become a driving force in the broader recovery of the country and its economy. What can investors do to prepare for a world beyond Covid? The most important thing is to realise that the emotional reactions they are experiencing as a result of the pandemic, and its effects on their investments, are perfectly normal. Research has shown that investors feel the pain of losses twice as much as they enjoy the pleasure of gains. A natural reaction to financial loss is fight, flight or freeze, and thus the burning need to do something. But they should not succumb to the urge to act on those emotions. Rather, they should speak to their financial advisers and get back to their original goals, which, for most people is to replicate today’s lifestyle tomorrow. That might even mean seeing this period of upheaval as an opportunity. Our view is that when we have periods of market volatility it is often a time when investors should be adding more to their investments rather than taking them away. Legendary investor Warren Buffett always says he likes his stocks the way he likes his socks: on sale. There’s an old saying in the investment community that you make your money at times like this. You just don't know it at the time. To get advise on investment options with a track record of good returns, please contact Kevin, email: invest@daberistic.com tel no: (011 658-1333 Written by: Victoria Reuvers (MD Morningstar) |
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