Earning interest on your PMSA

Circular 38 and its effect on your personal medical savings account (PMSA)

Did you know that all interest earned by the Scheme through members' PMSAs must now be held in a separate trust account on behalf of GEMS members and will later be credited to members' PMSAs?  If you have a PMSA as of 1 January 2012, you need to read more as this affects you.

Betty Sekodi has made it her mission to eat well and exercise in the year 2012. Due to her lifestyle and eating habits, she has not accessed her personal medical savings account (PMSA) in 2012. Betty is keen to know what will happen to the interest earned on the PMSA. 

Betty's interest earned on her PMSA account will be allocated to her PMSA for next year in the form of more credit. She can then use this credit to cover medical expenses in the following year.

Tshepo Nkomo has three dependants on his GEMS membership. None of Tshepo's dependants have fallen ill this year, but he has used some of his PMSA funds. Tshepo is uncertain how this will affect his PMSA and any interest he can earn.

The PMSA is allocated per family (everyone on the membership) and not per dependant, so interest will be earned according to how much the family has left in its PMSA.

Nicholas van der Walt plans to change from the Ruby option to the Onyx option in 2013. Nicholas is concerned that he will lose the interested he has earned.

All the interest that Nicholas earned while on Ruby in 2012 will be allocated to his PMSA by 31 December 2012. If he changes his option to Onyx for 2013, he will still receive the interest earned on his PMSA for 2012. The money will be paid into his bank account.

Now, below are some frequently asked questions to further help you understand what this Circular 38 means for you. 

1. What is Circular 38?
The Council for Medical Schemes (CMS) has set out that with effect from 1 January 2012, the interest that the Scheme earns on the monies in the personal medical savings account (PMSA) must be held in a separate trust account on behalf of members. The interest will then be added to members' PMSAs by 31 December 2012. Members who consequently have a positive balance in their PMSA will receive the interest in the form of more credit, which they may use to cover healthcare costs in line with the Scheme rules. This process has been specified in Circular 38 of 2011, produced by the CMS for all medical schemes.

2. What happened to my PMSAs prior to Circular 38?
According to the GEMS Scheme Rules, no interest was credited to members.

3. If I am currently on another option (not Ruby), do I qualify for interest?
No, because there is no personal medical savings account (PMSA) for the other four benefit options (Sapphire, Beryl, Emerald and Onyx) of the Scheme.

4. Does every dependant registered on the Ruby option have their own separate PMSA?
No. The PMSA is a family savings account; this means the benefit is allocated per family and not per dependant.

5. Can I exchange your PMSA interest earned for cash?
No. The interest earned can only be used for medical expenses as it is transferred in the form of more credit to your PMSA.

6. How is the interest in the PMSA calculated?
The interest will be calculated on a pro rata basis based on closing month-end savings balances.

7. How can I keep track of my PMSA?
A new savings account statement will be sent to members each year (the first one will be sent from March 2013). It shows all transactions and entries made on members' savings accounts, including the interest earned on actual savings balances at each month-end. This is a separate statement from the existing claims statement. This statement will be distributed to members on an annual basis, coinciding with the distribution of IT3(b) statements and summary of healthcare expenditure (tax certificates).

8. How does the PMSA affect my tax?
GEMS will still provide you with a tax certificate and normal SARS legislation will apply.

9. What will happen to my PMSA if I change my benefit option from Ruby to another option?
The balance of your PMSA account will be paid into your account. This is usually after a six month period.

10. What will happen to my PMSA if I plan to leave GEMS the following year?
The balance of your PMSA account will be paid into your bank account. This is usually after a six month period.

Have more questions? Please contact us on 0860 00 4367 or send an email to [email protected].