The Council for Medical Schemes (CMS) recently published the Demarcation Exemption Renewal Framework.
The Demarcation Regulations which came into effect on 1 April 2017, identified the types of contracts that, despite the contracts meeting the definition of the business of a medical scheme in the Medical Schemes Act (MSA), are “health policies” or “accident and health policies” that are subject to the jurisdiction of the Long-term Insurance Act (LTIA) or the Short-term Insurance Act (STIA) and not the MSA.
This meant that on 1 April 2017 when the amended definition of business of a medical scheme came into effect certain contracts offered by insurers as “health” or “accident and health” policies that meet the definition of business of a medical scheme referred to in the MSA, and which have not been identified as a “health policy” or “accident and health policy” in the Regulations, are no longer these types of policies and instead are subject to the MSA. This includes all contracts that defray expenditure incurred in connection with the rendering of any relevant health service instead of providing lump sum benefits unrelated to expenditure (primary healthcare insurance policies).
The Regulations do not allow insurers to continue to provide these types of contracts and from 1 April 2017, these types of benefits had to be provided in accordance with the MSA.
Prior to the Regulations coming into effect, the Minister of Health requested that CMS grant a two-year exemption for these types of contracts, while further research was done in terms of developing a Low-Cost Benefit Option (LCBO) guideline. CMS in consultation with other stakeholders approved the Exemption Framework, which permits the exemption of Providers of indemnity products that are conducting the business of a medical scheme from certain provisions of the Medical Schemes Act for a period of two years.
The exemption of indemnity products that are doing the business of a medical scheme expired on 31st March 2019. Entities that were granted an exemption on their indemnity products in 2017 were invited to submit renewal applications to extend the exemption for a further two years until 31 March 2021.
FSPs that are rendering financial services on indemnity products that are doing the business of a medical scheme are advised to ensure that the relevant product providers, which they deal with, have sought the required exemption.