{"id":1211,"date":"2017-03-28T12:28:59","date_gmt":"2017-03-28T10:28:59","guid":{"rendered":"https:\/\/www.namfisa.com.na\/educates\/?p=1211"},"modified":"2025-07-18T14:18:05","modified_gmt":"2025-07-18T12:18:05","slug":"medical-aid-funding-and-how-contributions-are-utilized","status":"publish","type":"post","link":"https:\/\/www.namfisa.com.na\/educates\/medical-aid-funding-and-how-contributions-are-utilized\/","title":{"rendered":"Medical Aid Funding and How Contributions are Utilised"},"content":{"rendered":"\t\t
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What Is a Medical Aid Fund?<\/h3><\/span><\/div>
A medical aid fund may be defined as a fund to which\na large number of people contribute, to help with\nunexpected medical expenses when needed.\nMedical aid fund members collectively pool their risk against\nthe very real likelihood of incurring medical expenses that\nwould otherwise be difficult to pay out of their own pockets. The\npremiums (money you contribute) for your medical aid fund\nbenefit option every month, is pooled together with all the other\nmember contribution premiums. Together this forms a cash pot\nfrom which the medical aid fund pays out claims.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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How Do Medical Aid Funds Determine Premiums?<\/h3><\/span><\/div>
How do medical aid funds know how much money is\nneeded to cover healthcare expenses?\nMedical Aid Funds estimate the overall annual risk of their\nmembers\u2019 healthcare expenses. They do this by reviewing\nhistorical claims and expected increases in the cost of medical\ntreatment (i.e. \u201cmedical inflation\u201d).\nSubsequently, the medical aid funds determine a finance\nstructure (your monthly premium) to ensure that sufficient\nmoney is available to pay for the healthcare benefits which\nthey plan on selling to you. This means they analyze how much\ntheir members claim, what they claim for, and the cost of the\nhealthcare treatment.\nThe medical aid funds then know what to charge members in\nterms of premiums for coverage. The higher level of coverage\nyou require the more you pay. It is because if you want access\nto a bigger part of the collected medical aid fund cash pot, your\ncontribution towards it needs to be bigger. If you want access to\na smaller part of the pot, your contribution needs to be smaller.\nThis is part of the reason why Medical Aid Funds do not allow\nyou to upgrade or downgrade your benefit option during the\nyear. Each year around the end of November the medical aid\nfunds release their premium increases for the next year.\nThe costs of healthcare expenditure such as doctor\nconsultations fees and hospitalisation fees to name but two, and\nnon-healthcare expenditure such as audit fees and marketing\ncosts paid during the current year will determine the increase in\nthe premiums of the following year.\nThe number of members that leave and join another Medical\nAid Fund during the year also influences the premium increases.\nIf medical aid funds are losing members, they either need to\nreduce benefits or increase premiums.\n\n<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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What Does My Contribution Pay For?<\/h3><\/span><\/div>
What does my contribution to the medical aid fund pay?\nA significant portion of the contribution premiums are used\nto cover healthcare expenditure such as specialists\u2019 consultation\nfees and medicines to name but a few, because this is the purpose\nof a medical aid fund. The premiums are also used to pay for the\nfollowing, amongst other expenditures:\nAdministration costs incurred for the administration of the\nfund, i.e. receipt of premiums and settlement of claims;\nw Managed care fees paid to medical professionals to\nensure members claims are approved for proper, cost effective\ntreatment;\nw Professional fees to investment managers for investing\nthe fund\u2019s unused cash and for managing these investments;\nw Auditors, as medical aid funds are required by law to have\ntheir financial statements audited; and\nw Actuaries who assist the fund in determining its funding\nrequirements, amongst other consultation services.\n<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Industry Spending Overview<\/h3><\/span><\/div>
Table 1 illustrates the proportion of contributions spend\non healthcare expenses and non-healthcare expenses, by the\nmedical aid fund industry during the period 2011 to 2015.\nTable 1: Healthcare and non-healthcare costs as percentage\nof total premiums, 2011 to 2015\nSource: NAMFISA Annual Report data for Medical Aid Funds\nfor the financial years ended 31 December 2011 to 2015\n<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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What Happens to Surpluses?<\/h3><\/span><\/div>
The portion of the premiums remaining after settling\nhealthcare and non-healthcare expenditure is not shared among\nthe members of medical aid funds or to anyone. The law states\nthat no portion of any surplus realized by the fund in any financial\nyear may be distributed to its members or any other persons.\nInstead, these surpluses are built up and serves as a safety net\nfor the medical aid funds during periods when claims are higher\nthan premiums.\nThese unused premiums built up over a period of time are also\nreferred to as the fund\u2019s reserves and NAMFISA\u2019s requirement\nis that the reserves must at all times be maintained at 25% of\nannual contributions, i.e. the reserves level.\n<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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conclusion<\/h3><\/span><\/div>
In conclusion, medical aid funds are funded through the\ncontributions paid by the members of medical aid funds. The\nportion of contributions that remain after settling the expenses\nare collected to serve as a safety net during periods when claims\nare very high.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

What Is a Medical Aid Fund? A medical aid fund may be defined as a fund to which a large number of people contribute, to help with unexpected medical expenses<\/p>\n","protected":false},"author":1,"featured_media":1213,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_EventAllDay":false,"_EventTimezone":"","_EventStartDate":"","_EventEndDate":"","_EventStartDateUTC":"","_EventEndDateUTC":"","_EventShowMap":false,"_EventShowMapLink":false,"_EventURL":"","_EventCost":"","_EventCostDescription":"","_EventCurrencySymbol":"","_EventCurrencyCode":"","_EventCurrencyPosition":"","_EventDateTimeSeparator":"","_EventTimeRangeSeparator":"","_EventOrganizerID":[],"_EventVenueID":[],"_OrganizerEmail":"","_OrganizerPhone":"","_OrganizerWebsite":"","_VenueAddress":"","_VenueCity":"","_VenueCountry":"","_VenueProvince":"","_VenueState":"","_VenueZip":"","_VenuePhone":"","_VenueURL":"","_VenueStateProvince":"","_VenueLat":"","_VenueLng":"","_VenueShowMap":false,"_VenueShowMapLink":false,"footnotes":""},"categories":[426],"tags":[],"class_list":["post-1211","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pension-funds"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/comments?post=1211"}],"version-history":[{"count":13,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1211\/revisions"}],"predecessor-version":[{"id":35630,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1211\/revisions\/35630"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/media\/1213"}],"wp:attachment":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/media?parent=1211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/categories?post=1211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/tags?post=1211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}