Medical schemes are looking for ways to deal with the negative impact of COVID-19 and have approached the Council for Medical Schemes (CMS) with requests for exemptions from the Medical Schemes Act (MSA). One of the measures offered to medical schemes was to allow, on application, the deferral of member contributions. This measure was offered to Small, Medium and Micro Enterprises (SMMEs) with employees of less than 200 to put forward a case to their medical schemes to defer contributions for a certain period to protect their employees’ medical cover. However, the deferral of contributions negatively impacts the commission payable to brokers and broker organisations as Regulation 28(5) made under the MSA prohibits medical schemes from paying commission to brokers and broker organisations for providing broker services, if the relevant monthly contribution for that member is not received.
Regulation 28(5)
“Payment by a medical scheme to a broker… shall be made on a monthly basis and upon receipt by the scheme of the relevant monthly contribution in respect of that member.”
CMS Circular 39 of 2020, published on 27 May 2020, sets out the position on the payment of commission to brokers and brokerages. The Circular states that the CMS is open to exemption applications from Regulation 28(5) however this is not a blanket exemption and each application will be assessed on its own merits.
Where SMMEs have been able to defer their medical aid contributions, impacting the commission earned by brokerages, these brokers would have to approach the medical scheme, who in turn will have to make an application to the CMS (if they are eligible) for exemption from Regulation 28(5) and if they are granted the exemption, then they would be able to pay the broker commission even though they are not receiving the medical aid contribution.
The Circular further sets out the approach and criteria for exemption consideration as well as conditions for granting the exemption.
Applications for exemption can be submitted to Ms. Florence Maphanga on email: accreditenquiries@medicalschemes.com by 15 June 2020.