Section 1 Section 2
MEDICAL AID INSIGHTS 2021/2022
Section 3 Section 4
2.4
Contributions
Medical schemes work on the concept of risk pooling, where the risk contribution charged to members depends on a combination of these factors:
Claims: the expected medical expenses of the entire membership group
Non-healthcare expenses: the expected costs associated with the administration of claims and day-to-day operations
Investment income: the interest or returns expected from the scheme’s assets
In simple terms, the financial operations of a medical scheme can be described by four main factors, shown in this equation:
contributions + investment income ≥ claims + expenses
Allocation of contribution income in 2020 100% 95%
75% 65% 55% 45% 35% 25% 15%
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Percentage of gross contribution income
85%
Medical savings account
Healthcare expenditure
Non-healthcare expenditure
Contribution to reserves
23
