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What you need to know about medical insurance as an employer

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BusinessTeam-freedigitalphotos.jpgLiving costs in South Africa are on the rise. With that, annual medical insurance contributions continue to increase as part of this trend and many South Africans are struggling to keep up. How do you, as an employer, respond to this? What are your obligations and responsibilities to your employees in this regard?

We take a deeper look into medical insurance from an employer’s perspective.

General trends

With the cost of medical insurance being what it is, many employees may opt to not be covered by a medical insurance scheme. It’s a matter of affordability, but the benefits of medical cover outweigh the costs in the end, and employees should be encouraged to join for their own advantage.

Company employee only schemes

A company medical insurance scheme is restricted in the sense that eligibility for membership is only open to employees. The advantages are that every employee receives a benefit from the cover. The disadvantage is that most South African companies can’t afford it.

What tends to happen is that many companies within an industry will band together to offer their employees an industry-specific medical insurance scheme. Motohealth for workers in the motor industry is a good example of this kind of insurance.

Medical insurance subsidies

As an employer, you can also have your business cover a portion of your employees’ monthly contributions to a medical insurance scheme. You have the right to restrict this to a specific scheme, forcing your employees to join a particular scheme. This can be useful in helping to negotiate monthly premiums and percentage contributions.

As an employer, it’s entirely your prerogative as to how much to pay towards contributions, although this will most likely be determined by the state of your business, rather than generosity. The most popular rate across companies is 50%, but it can be as low as 30% or as high as 66%. Whatever the subsidy rate is, your employees will still be responsible to settle the full amount of the monthly premium.

Permanent health insurance paid for by the employer is also not an obligation and is certainly not South African business standard.

Cost to Company (CTC)

By far the most popular medical insurance solution for businesses is a CTC agreement. As an employer, you will offer your employees a portion of their medical insurance contributions. This amount will be agreed upon in the employment contract and, should it be agreed upon, your employee cannot expect any excess amount.

It’s also important to note that, should you do this, then as an employer, you have the right to force your employees to be part of a specific scheme.

This article is brought to you by Essential Med which offers permanent health insurance paid for by the employer.

Copyright (c) 2016, the credited author
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