GEMS announces 2013 benefit structures and increases

South Africa's second largest medical scheme, the Government Employees Medical Scheme (GEMS), today announced its benefit structures and contribution increases for 2013. The closed Scheme, which provides healthcare cover to public servants, also said that it had reached a membership level of more than 660 000 principal members. This represents over 1.7 million covered lives.

When making the announcement, Ms. Christa Brink, Deputy Chairperson of the GEMS Board of Trustees, noted that GEMS now covers about 62% of all eligible public service employees, 55% of whom did not previously have access to the medical scheme subsidy provided by the employer before GEMS was established. "These high growth figures are mainly due to the Scheme remaining close to its members while staying attentive to their needs. GEMS offers big Scheme security with individualised service levels and every one of our members is important to us. We believe that this is what has given rise to the success and growth of GEMS," she added.

"Last year the Scheme surpassed the GEMS specific business plan target set by the Council for Medical Schemes," said Brink. "However, in order to strengthen Scheme reserves in line with legal requirements and to protect member interests into the future, the Scheme has had to increase the contribution rates for 2013. With effect from 1 January 2013 the average weighted contribution increase of the Scheme will be 10.26%. The contributions paid by GEMS members are income based and GEMS will at the same time adjust all salary band boundaries by 7% in order to ensure that the majority of members who recently received salary increases will not move to higher salary bands in the Scheme's contribution table."

The Scheme confirmed that an announcement on the increase of the employer medical assistance subsidy for GEMS members is awaited. . Should the subsidy remain unchanged, members will experience an effective out of pocket contribution increase of more than the average 10.26% increase announced by the Scheme.

"Benefit levels have been increased by 5.5% across the board on all GEMS options. While we are at all times mindful of the need for greater affordability we also fully understand the importance of good benefits that will serve the healthcare needs of our members and their loved ones," noted Brink.

The 2013 benefit increase, which is unavoidably higher than increases of previous years, comes off a historically low base. GEMS is required by law to build reserves equal to 25% of annual contributions. The Medical Schemes Act and its Regulations require these reserves to be held so that schemes remain protected from unpredictable, adverse circumstances such as unexpectedly high claims from members. Reserves are also built through increasing contributions. A portion of member contributions is specifically used to bolster reserves while most of the funds are employed to settle medical claims.

Brink said the increase was attributable to the fact that GEMS has historically been a fast-growing Scheme, with approximately 6 000 new members joining the Scheme on a monthly basis during 2012. "As these new members join GEMS, the total annual contributions received by the Scheme, and therefore the reserves that the Scheme is required to hold, increases significantly.
 While rapid membership growth can place temporary strain on the solvency of a medical scheme, growth in membership by the same token ensures that the Scheme is placed in a healthier position as the larger the membership, the more diversified  is the risk."

"Our true test came with the migration of approximately 16 000 pensioners who retired before 1992 (the pre-92 pensioners) to GEMS in April 2012. This significantly diluted the reserves of the Scheme as the pensioners did not bring reserves with them when they joined GEMS."

"The average age of the pre 92 pensioners is 82 years. The average age of Scheme members prior to them joining was 43 years. One of the Scheme's greatest concerns in this regard is the cost associated with covering the healthcare needs of such a large group of individuals who are of an advanced age. It is noteworthy that 96.6% of these pensioners are chronic medicine users while 95% claim benefits on a monthly basis. The 2012 Scheme budget had not provided for these members who as a result contribute between R20 and R25 million per month towards deficits experienced by the Scheme. The impact of this financial burden has weighed heavily on the Scheme and will reduce reserves by 1.1% by the end of 2012."

GEMS continues to provide members with value for money benefits that are unmatched in the industry. The Scheme is known for providing good core benefits without the frills that tend to make medical cover more expensive.

The low non-healthcare expenditure, which at 6.1% is the lowest annual figure recorded to date since the inception of the Scheme and half the industry average of about 12%, serves as an indication that non-healthcare costs are firmly in check despite the unprecedented growth of the Scheme

"Importantly, GEMS members can look forward to enhanced benefits on every Scheme option. Amongst the 2013 benefit enhancements is a sub-limit of R15 000 under organ and tissue transplants which was introduced to cater for funding of imported corneal grafts as there is a shortage of local corneal grafts across all options. Alternatives to hospitalisation, specifically post surgical home nursing care, will also now be covered on all options. The introduction of preventative care benefits which are, subject to the managed care processes of the Scheme, is also a new benefit enhancement," outlined Brink.

"The inclusion of in-hospital lingual and labial frenectomies under general anaesthesia for children under the age of eight on the Ruby, Emerald and Onyx options is another welcome benefits enhancement. Out of hospital treatment of impacted third molars under conscious sedation in dentists' rooms will now also be covered at 200% of the GEMS Scheme Rate on these three options."

"At the end of the day, it is really all about meeting members' needs with clinically appropriate, well-designed benefits," concluded Brink.