Agreement on medical aid

THE government announced yesterday that it had finalised an agreement with unions on medical scheme subsidies for civil servants, a move it hopes will provide sufficient incentives to accelerate membership of the new Government Employees Medical Scheme (Gems). The scheme and its linked subsidies are intended to make medical scheme membership affordable for more civil servants, of whom only 60% belong to such schemes. There are about 1-million civil servants. Gems was launched in January, but got off to a sluggish start, with a particularly slow take-up rate on its cheapest benefit package, Sapphire, aimed at civil servants on very low salaries. Yesterday, the public service and administration department said it had reached a majority agreement with five of the eight unions representing civil servants, which would see a new set of generous medical scheme subsidies kick in from July 1. In terms of the deal, public servants who join Gems will be eligible for a 75% subsidy of their monthly contributions, capped at R1 900. Workers on the lowest salary bands, earning less than about R60 000 a year, will get a 100% subsidy, also capped at R1 900. This means a low-wage-earning civil servant and family will be able to join Sapphire without making an out-of-pocket contribution. Membership of Sapphire costs R981 a month for a family of five where the principal member earns less than R2 500 a month, according to the Gems website. The state employed 325 000 people on salary bands 1 to 5, 191 000 of whom were not medical scheme members, said Gems principal officer Eugene Watson. Assuming an average family size of three, Sapphire could ultimately bring about 600 000 new lives into the medical scheme market, which has stagnated at the 7-million mark for the past decade. Gems had so far enrolled about 11 000 principal members, but take-up was expected to increase rapidly after the new agreement came into effect. Government had set aside R6bn for the implementation of the scheme over the next three years. Civil servants on other medical schemes would continue to receive subsidies of up to two-thirds of their monthly contributions, capped at R1 014. Membership of Gems would be compulsory for all people joining the civil service who want to make use of the subsidies. Watson downplayed the fact that the three biggest unions representing civil servants had not signed the agreement, saying he did not expect this to hamper signing up new members. The South African Police Union, the Police and Prisons Civil Rights Union, the National Education, Health and Allied Workers' Union, the Democratic Nurses Organisation of SA, and the Health and Professional Services Association put pen to paper, but the Public Servants' Association, the South African Democratic Teachers' Union, and the National Professional Teachers' Organisation of SA did not.