How changes to your family composition impact your Medical Savings Account

We calculate and allocate your Medical Savings Account balance based on the number of dependants registered on your membership on 1 January of that year. This gives you an annual upfront medical savings that is used to pay all claims received from 1 January for that year.

When there are changes to the composition of your membership during the year, we need to adjust the Medical Savings allocation. This may result in debt owed by you to the Fund.

We can best illustrate how this happens by giving you some examples:

Example 1

On 1 January Mr Jacobs, his wife, and three children are registered on the Fund. The Fund allocates 12 months' worth of medical savings to the membership for Mr and Mrs Jacobs at adult rates, and for the three children at child rates.

During the year, one of the dependants turns 21. We don't receive proof of dependency as requested and then calculate the contribution and allocate the Medical Savings Account (MSA) based on adult rates for that child for the rest of the year.

Mr Jacobs submits proof that his child is a student and the Fund approves a backdated change to allow the rate at which contributions are charged for the child to be changed back to "Child" rates.

Debt will be created when: Mr Jacobs has used the available money in the Medical Savings Account, that was allocated based on expected contributions at adult rates. He will then need to pay the difference between the available Medical Savings Account balance based on the Child rates and the actual amount spent back to the Fund.

Example 2

On 1 January, Mr Skosana, his wife, and three children are registered on the Fund. One of the children, Zinzi, is 22 years old.

The Fund allocates 12 months' worth of medical savings for Mr and Mrs Skosana and Zinzi at adult rates, and for the other two children at child rates. In May of the year, Mr Skosana provides proof that Zinzi is registered as a student. He also provides the proof of student registration.

The Fund recalculates the available Medical Savings Account (MSA) for the year for the Skosana family. Based on Zinzi's amended status, the total available MSA for the year is less than the amount that was initially allocated.

This created debt: When Mr Skosana submitted proof that Zinzi is a student, the family had already spent a large portion of the allocated MSA for the year. The amount spent was more than the lower annual MSA after the change was made and Zinzi's contributions were based on child rates. The change in May - to charge contributions for Zinzi based on child rates instead of adult rates that were charged from 1 January - now means that the Skosana family has overspent on their MSA and an amount is owing to the Fund.

If you find yourself in the same position as one of the members in our examples, you will have to pay the overspent amount back to the Fund.

Remember: No debt will be created, and you will not have to repay any Medical Savings Account debt to the Fund if you respond on time to the requests to prove your dependants' eligibility.

When we request it, please send the documents to confirmation@engenmed.co.za.