PROPOSED MEDICAL SCHEME AMALGAMATION

Transcription

1 PROPOSED MEDICAL SCHEME AMALGAMATION Dear Member Proposed amalgamation of the Altron Medical Aid with Discovery Health Medical Scheme This letter is to inform you of the proposed amalgamation between the Altron Medical Aid ( AMA ) and Discovery Health Medical Scheme ( DISCOVERY ). An amalgamation of medical schemes means that the assets and liabilities of one medical scheme (in this case, AMA) are transferred to another medical scheme (in this case, DISCOVERY). Three important issues are addressed in this letter: The actions taken by the AMA Board of Trustees ( the Board ) to reach a decision to propose an amalgamation with DISCOVERY; The process that members must follow with respect to the proposed amalgamation; and The importance of member voting in order for the proposed amalgamation to be approved. 1. Background The Altron Medical Aid was established in 1987 to provide healthcare cover at affordable contributions to employees and retirees of the Altron group of companies. The Scheme is administered by Discovery Health (Pty) Ltd and is managed by the Board. The Board comprises of employees of Altron. Key factors affecting the future sustainability of the Scheme and which have prompted the Board to propose a winding down of the fund through an amalgamation are: Limited number of benefit options AMA only offers two benefit options to members, the Basic and the Enhanced plans. By contrast open medical schemes offer a range of benefit options to suit the individual needs of members. AMA s limited benefit offering prevents members from selecting an appropriate benefit option based on their healthcare needs and affordability. It also limits the participating employers ability to provide a medical scheme offering that attracts best of breed employees and assists in retaining these employees in the organisation. Small membership base The membership of AMA has remained relatively stagnant at around 4,000 principal members for the past five years as seen in the graph below Trend in membership April 2013 The small membership base increases the negative impact that high cost claims have on the scheme s overall financial performance. AMA s current membership falls short of the required 6,000 principal members to register as a new medical scheme today. Ageing demographic profile The table below shows that the proportion of pensioner members (beneficiaries 65 years old or older) has steadily increased over the past 5 years to 15.1% as at 30 April This is well above the industry average of 6.5%.

2 % beneficiaries aged % 14% 12% 10% 8% 6% 4% 2% 0% Pensioner ratio (65 + years) 14.57% 15.1% 12.5% 12.9% 12.8% 10.4% April 2013 their business model to the Board at a Special Board of Trustees meeting held on 22 May 2013 and were assessed on their financial position and strategic vision, appropriateness of benefit offering for low-income members, alignment of best-fit options to the current AMA benefits, administration and member servicing model, clinical and financial risk management and terms and conditions of their offer. The Scheme s average age of 37.7 years is also above the industry average of 31.6 years. AMA s ageing demographic profile is only likely to worsen over time as the membership remains constant or declines. This is likely to result in rising claims costs, and in particular the number of high cost claims, as older members tend to claim more than younger members. Strategic objectives of the employer group Although AMA is a separate legal entity, Altron and its subsidiaries is an important stakeholder in AMA. Given the complexity of medical scheme legislation which requires increasing management time and focus, the participating employers have decided to focus on their core business and exit the medical scheme industry but still offer employees appropriate healthcare cover via an open medical scheme. Selection of a suitable amalgamation partner Given the above factors, at a Board of Trustees meeting held on 04 April 2013 the Board resolved to amalgamate the Scheme with an appropriate amalgamation partner and to appoint Alexander Forbes Health (Pty) Ltd as the transaction advisor and project manager for the amalgamation. As a first step, South Africa s Top 10 open medical schemes, in terms of size, were evaluated. The schemes are Discovery, Bonitas, Medihelp, Medshield, Momentum, Fedhealth, Bestmed, Liberty, Sizwe and Keyhealth. The evaluation criteria included state of governance, demographic profile, financial performance and the appropriateness of benefit offering. AMA s claims and membership data was sent to these schemes for assessment and Bestmed, Discovery, Fedhealth and Liberty expressed an interest in the proposed transaction. A sub-committee of the Board, tasked with assessing the schemes, shortlisted two schemes for further evaluation by the Board. These were Discovery and Fedhealth. The schemes presented The outcome of the in-depth assessment saw DISCOVERY unanimously selected by the Board as the scheme which best satisfied the key selection criteria listed below: A wide range of benefit options, and in particular options catering to low-income employees for whom affordability is a key concern. Large investments in technological innovation. Ease of consolidation of all the employer s medical scheme arrangements (Altron currently has a large group of employees on Discovery as a result of past medical scheme policies). Ease of transferability of service provider networks (hospitals, general practitioners, specialists and medication dispensaries). Ease of transferability and limited disruption to members registered for chronic medication and on disease management programmes like oncology, diabetes and HIV/Aids. Retention of the Vitality programme which is highly valued by a large portion of the membership. 2. The way forward A business plan for the proposed amalgamation has been approved by the Board of AMA and DISCOVERY and has been submitted to the regulator, the Council for Medical Schemes (CMS) for consideration. At the DISCOVERY Annual General Meeting on 20 June 2013, DISCOVERY members voted overwhelmingly in favour of the proposed transaction (99.9%). The next step is for members of AMA to cast their vote, either in favour of or against the proposed transaction. The proposed date for the amalgamation is 01 January On this date, subject to member approval all rights, obligations, assets and liabilities of AMA will vest in

3 DISCOVERY and the amalgamated scheme will be governed by the DISCOVERY rules. Notices will be published in national newspapers once the business plan for the amalgamation has been formally approved by the CMS and members of both schemes will have the opportunity to inspect it and to lodge objections should they so wish. 3. Member voting Members of AMA need to cast their vote and make their opinion heard, either by voting in FAVOUR of or AGAINST the proposed amalgamation by no later than Friday, 23 August Every AMA member s opinion is important! The only way to make sure your opinion is heard is to participate in the voting process. The Board relies on the willing and active participation of members to vote. 4. Why it is important for members to vote Before the amalgamation can be formally approved by the regulator, the CMS, the members of both medical schemes need to approve the transaction. DISCOVERY members have already voted in favour of the transaction. AMA members now need to cast their vote. In terms of the AMA rules at least 50% of members need to participate in the voting process and to cast their vote, either in FAVOUR of or AGAINST the proposed amalgamation. If the majority of the votes cast (at least 50% plus one) are in FAVOUR of the transaction, the amalgamation will continue subject to formal approval from the CMS and the Competition Commission. We will inform AMA members of the outcome of the voting process as soon as possible. If the majority of the votes cast (at least 50% plus one) are AGAINST the transaction, the amalgamation with DISCOVERY will not continue. This means the Board will have to re-visit other options to ensure the future financial sustainability of the Scheme. This is likely to result in: Higher contribution increases than the market average so that claims and expenses are covered by contribution income; reductions to contain cost escalations; and Possible liquidation of AMA. These changes will negatively affect the market competitiveness of the Scheme with the result that medical aid cover for low-income members will become unaffordable. Voluntary liquidation of AMA is likely to follow which will leave high risk members (members and dependants with chronic conditions) exposed to underwriting and waiting periods (of a three month general waiting period and/or a 12-month condition specific waiting period) on application for membership to a new medical scheme. 5. How to vote AMA members may vote using one of the following options: Electronic reply to the voting communication s received from Alexander Forbes (Altron@ aforbes.co.za) by clicking on the link provided and completing the electronic ballot paper; or Downloading the ballot paper from the Scheme s website: completing it and sending it to KPMG via internal mail; or Completing the ballot paper sent via post and sending it to KPMG in the postage paid self addressed return envelope included in the communication pack. SEND BALLOT PAPER TO KPMG AltronBallot@kpmg.co.za (use the subject heading Altron Ballot ) Facsimile: +27(0) (use the subject heading Altron Ballot ) Post: Altron Medical Aid Ballot c/o KPMG Private Bag 9 Parkview 2122 Completed ballot papers must reach KPMG, the auditors by no later than 16h00 on Friday 23 August Members can also hand in their completed ballot papers at a scheduled information session. KPMG will count the votes and validate the results on behalf of the Scheme. If a member submits more than one vote, KPMG will count the latest ballot received (as per the date stamp on the envelope, fax or ) as the member s final vote.

4 6. Information Sessions/Road Show Schedule Please refer to the enclosed schedule for full details on the information sessions. Your attendance is important as these sessions will provide you with an overview of the proposed amalgamation, the DISCOVERY product and the importance of your vote! If the amalgamation is successful, to facilitate ease of administration AMA members will be defaulted to the closest DISCOVERY option based on a member s current AMA benefi t option and chronic benefi t registration: AMA option Basic Discovery default option Classic Saver 7. We will let all members know what the outcome is As soon as KPMG has counted the votes and completed the auditing process, we will inform members of the outcome. 8. Important information Enhanced (Members NOT registered for a chronic condition on the Additional Disease List) Enhanced (Members registered for a chronic condition on the Additional Disease List) Classic Priority Classic Comprehensive This section describes what will happen if the members of both schemes accept the proposed amalgamation. AMA benefits before the amalgamation AMA will continue to operate as normal up until the amalgamation date and members will have access to benefi ts on AMA as per the 2013 benefi t and contribution schedule up until midnight on 31 December Summary of the DISCOVERY product and default benefit options We have included a summary of all the DISCOVERY benefi t options so that you can familiarize yourself with the 2013 benefi ts and contribution rates. It is important to note that the DISCOVERY benefi ts and contributions will change on 1 January 2014 in line with general scheme changes. Details on the 2014 DISCOVERY product will be made available to you later this year once published by the scheme. However, all members will get an opportunity prior to the date of amalgamation to choose their preferred DISCOVERY option from the range of options offered. The benefi ts and contributions of a member s chosen DISCOVERY option will apply from 01 January On behalf of the AMA Board we trust you will now be in a position to make an informed decision about your future medical scheme cover for yourself and your dependants. Kind regards Alex Smith Chairman of the Board of Trustees Roger Sedlmaier Principal Offi cer

5 ? A Questions and answers Q: Why do I have to vote? A: According to the Medical Schemes Act 131 of 1998 (as amended) for two medical schemes to amalgamate/ merge, members of both schemes have to approve the transaction. This means that Altron Medical Aid (AMA) cannot amalgamate/merge with Discovery Health Medical Scheme (Discovery) unless the members of both schemes vote in favour of the transaction. For the amalgamation to proceed, at least 50% of AMA members are required to cast their vote, either in favour of or against the proposed amalgamation. If the majority of returned ballots are in favour, then the amalgamation will proceed. Votes will be counted and audited by the Scheme s external auditors, KPMG. Q: Who can I contact for more information or support? A: For more information on the amalgamation process and assistance in understanding the Discovery product, you can contact: Phone: ALEXANDER FORBES HEALTH CALL CENTRE (office hours from 07h30 to 17h00) or hcclientservices@aforbes.co.za (use the subject heading Altron ) Facsimile: (use the subject heading Altron ) SMS: the word Altron to and a consultant will call you back within 24 hours (sms charged at standard rates) Q: What is the cut-off date for member voting? A: Friday 23 August 2013 at 16:00 Q: When is the Discovery Health Medical Scheme take-on date? A: 01January 2014 Q: Who is required to transfer to Discovery? A: All current AMA members including pensioners have to transfer to Discovery on 01 January 2014 in terms of the amalgamation terms and conditions. No underwriting (i.e. no waiting periods or pre-existing condition exclusions) will be applied to AMA members on transfer. All members will be transferred underwriting free. Q: Do my dependants also have to transfer to Discovery? A: Yes, registered dependants must also transfer to Discovery on 01 January 2014 as part of the amalgamation terms and conditions. Q: What are the advantages of the merger with Discovery Health Medical Scheme? A: AMA members will transfer into a much larger, more stable medical scheme that offers a wider range of benefit options. This will enable members to choose an option which meets their individual healthcare needs and affordability most effectively. No underwriting will be applied to transferring members. This means members won t have any waiting periods or exclusions placed on their benefits they will have immediate access to all benefits offered by the benefit option they choose. No change in the administration of member claims. No change to the way in which chronic medication is managed. The process remains the same but the chronic conditions covered may change depending on the benefit option selected. Members will keep their Vitality benefits and Vitality points.

6 Q: What will happen to AMA reserves on amalgamation? A: The reserves are not owned by members but by the Scheme. Members have access to the reserves only in so far as the reserves protect members entitlement to claim benefits in terms of the rules of the scheme. On amalgamation, all the AMA assets and liabilities will be transferred to the Discovery Health Medical Scheme. This includes all reserves of the Scheme as at the date of amalgamation. Q: How do I choose a benefit option on Discovery? A: Subject to final approval of the transaction, you will get an opportunity before the transfer date to choose your preferred Discovery benefit option from the range of options offered. To help you choose the most suitable option for your healthcare needs, you will be invited to attend information sessions and you will have access to accredited healthcare advisors who will guide you in the selection process. Should you not choose a Discovery option a default option will be allocated to you depending on your current AMA benefit option and chronic benefit registration: AMA option Basic Enhanced (Members NOT registered for a chronic condition on the Additional Disease List) Enhanced (Members registered for a chronic condition on the Additional Disease List) Discovery default option Classic Saver Classic Priority Classic Comprehensive Q: Will I have a new membership number with Discovery? A: Yes, you will receive a new Discovery membership number and membership card. Q: How will my chronic medicine be covered on Discovery? A: You are reminded that the Discovery options may or may not cover your current registered chronic condition or medicine. If you are registered for chronic medication you must carefully examine the Discovery options to ensure you chose the most appropriate one. Discovery will contact affected members prior to the amalgamation date to ensure that they are informed and updated. Q: What will happen to my Medical Savings Account balance once AMA amalgamates with Discovery? A: All accumulated savings will be transferred to Discovery after a claims run off period of 4 months after the transfer date (May 2014). Accumulated savings will only be paid out in cases where a member selects a Discovery benefit option that does not offer a MSA allocation. Q: How will we know about the outcome of the merger? A: As soon as the auditors have counted the votes and verified the results, we will let you know what the outcome of the voting process is. The closing date for voting is Friday 23 August 2013 at 16:00 Q: When will I get more information on the 2014 Discovery options? A: Discovery Health Medical Scheme will announce the 2014 changes to benefits and contributions before the end of September You will receive more information on the 2014 Discovery product during the member transfer road show in November Q: Where do I get full details on the Information Sessions on the proposed amalgamation? A: Please refer to the enclosed ROADSHOW SCHEDULE for full details on the Information Sessions. These sessions will be held at major sites, country-wide and are open to all active and retired members of AMA. Inform your doctor and other healthcare providers of your new medical scheme and membership number as soon as possible. You can expect to receive your new Discovery membership card during December Your new Discovery membership number will also be sent to you electronically.

7 Comparison of ALTRON Medical Aid with selected Discovery Health Medical Scheme plans 1 1

8 s Altron Medical Aid Basic Discovery Health Medical Scheme Classic Saver Overall Annual Limit (OAL) Major Medical s Paid from Major Medical, unless otherwise stated Paid from Hospital, unless otherwise stated Hospitalisation 100% of Scheme Rate: General Ward 200% of Scheme Rate: General Ward Deductibles Following deductibles apply for in-hospital dental treatment: Day-clinic Age< 13 years: R700 Age 13 years: R2,400 Hospital Age< 13 years: R1,450 Age 13 years: R3,650 Following deductibles apply for in-hospital dental treatment: Day-clinic Age< 13 years: R700 Age 13 years: R2,400 Hospital Age< 13 years: R1,450 Age 13 years: R3,650 Alternatives to Hospitalisation 100% of Scheme Rate Hospice / Terminal Care: Limited to 10 days per family per year 200% of Scheme Rate Hospice / Terminal Care: R31,000 for each person in their lifetime Specialists Network Specialists: Paid at cost with no overall limit Other: Paid at 100% of Scheme Rate with no overall limit Premier Rate Specialists: Paid at cost with no overall limit Other: Paid at 200% of Scheme Rate with no overall limit General Practitioners (in-hospital) Paid at 100% of Scheme Rate with no overall limit Paid at 200% of Scheme Rate with no overall limit Casualty and Emergency Consultations Paid at 100% of the Society Rate from day-to-day insured benefit and paid at 100% of the Discovery Health Rate Dental Surgery Maternity s Radiology and pathology Specialised Radiology: MRI & CT Scans Specialised Procedures (Scopes) Severe Dental and Oral Surgery - list of defined procedures: no deductible + no overall limits. Subject to pre-authorisation and clinical entry criteria. Dental devices, appliances and orthodontic treatment (including related accounts for orthognathic surgery) paid at 100% of Scheme, subject to available funds in Phase 1. Deductible payable for in hospital dentistry - younger than 13 years R700 at a day clinic, R1,450 in hospital. 13 years and older R2,400 at a day clinic, R3,650 in hospital. Balance of hospital account paid at 100% of Scheme Rate. Related accounts paid at 100% of Scheme Rate. Routine conservative dentistry such as preventative treatments, simple fillings and root canal treatments from available funds in Phase 1 MRI/ CT scans R2,450 co-payment applies PET scans not covered In Hospital: Hospital + Related accounts paid from Major Medical R2,850 co-pay paid from Phase 1 Out of Hospital: Paid from Major Medical at 100% of the Scheme rate Severe Dental and Oral Surgery - list of defined procedures: no deductible + no overall limits. Subject to pre-authorisation and clinical entry criteria. Hospital account paid at 100% of Scheme Rate. Related accounts paid at 200% of Scheme Rate. Dental devices, appliances and orthodontic treatment (including related accounts for orthognathic surgery) paid at 100% of Scheme Rate from the day-to-day benefit. Deductible payable for in hospital dentistry - younger than 13 years R700 at a day clinic, R1,450 in hospital. 13 years and older R2,400 at a day clinic, R3,650 in hospital. Routine conservative dentistry such as preventative treatments, simple fillings and root canal treatments from available funds in MSA Paid at 200% of the Scheme Rate in-hospital. Out-of hospital paid from available day-to-day benefits In & Out of Hospital: and paid from Hospital if related to hospital admission. Conservative Back & Neck treatment, scans unrelated to hospital admission and scans performed out-of-hospital: R2,450 co-pay paid from available day to day benefits In Hospital: Hospital + Related accounts paid from Hospital R2,850 co-pay paid from day-to-day benefits Out of Hospital: Paid from Hospital at200% of the Scheme rate Chronic Medication Limit Formulary: Non Formulary: Chronic Drug Amount (CDA) Formulary: Non Formulary: Chronic Drug Amount (CDA) Number of Chronic Conditions 27 PMB s 27 PMB s Levy / Co-Payment Formulary: None Non Formulary: Difference in excess of Standard CDA Formulary: None Non Formulary: Difference in excess of Standard CDA DSP for Chronic Medication None None Oncology Renal Dialysis R340,000 for each family in a rolling 12-month period limited to tier 1 (as per state protocols) Network - 100% of Cost Other - 100% of Scheme Rates authorised surgical admissions paid at 200% of Scheme rate 20% co-pay on all non-surgical Oncology-related costs exceeding R200,000 per 12 month cycle No co-pay on PMB s Network - 100% of Cost Other - 100% of Scheme Rate Organ Transplants 100% of Scheme rate, subject to pre-authorisation, protocols apply 200% of Scheme Rate Prostheses & Appliances Mental Health and Substance Abuse HIV/AIDS Internal Prosthesis: Limited to R63,400 per family per year Hip, knee and shoulder joint prosthesis: Network - covered in full Non-network - R33,000 per prosthesis Spinal prosthetic devices: R23,000 per level, R46,000 for 2 or more levels, limited to 1 procedure per beneficiary per year External Appliances: Paid from day-to-day benefits and limited to R10,000 per year Hearing Aids: paid from Day-to-Day and limited to 1 x hearing aid every two years Paid at 100% of the Scheme rate and limited 21 days for in-hospital treatment for each person for the year subject to Prescribed Minimum. Member must register on programme and must use the Designated Service Provider Internal Prosthesis: fromhospital sub-limits apply: Cochlear and auditory brain implants: R155,000 for each person for each benefit Internal nerve stimulators: R117,000 per person Hip, knee and shoulder joint prosthesis: Network - covered in full Non-network - R33,000 per prosthesis Spinal prosthetic devices: R23,000 for 1st level, R46,000 for 2 or more levels, limited to 1 procedure per beneficiary per year External Appliances and Hearing Aids: Subject to available funds in MSA Paid at 200% of the Scheme rate and limited 21 days for in-hospital treatment for each person for the year subject to protocols. Member must register on programme and must use the Designated Service Provider International cover No benefit International travel cover of 90 days limited to R5 million per beneficiary per journey for emergency claims. Excesses apply on day-to-day claims Claims incurred outside of 90 day period and / or elective claims paid at the SA equivalent Emergency Assistance Discovery 911 Discovery 911 and Sub-Saharan Africa evacuation (ER 24) Out of Hospital s Paid from phase 1 Paid from Medical Savings Account Savings Level (MSA)/ Day-to-day General Practitioners Phase 1: 20% of Total Contribution P R4,546 A R4,253 C R835 Subject to the cover available in the Phase 1. When Phase 1 funds are depleted, members have access to the following network GP consultations: M: 2 visits M+1+: 4 visits 25% of Total Contribution P - R5,436 A - R4,284 C - R2,172 Subject to available funds in MSA. When MSA funds are depleted, members have access to the following network GP consultations: M: 3 visit M+1+: 6 visits GP Network Discovery GP Network/Freedom of Choice Discovery GP Network/Freedom of Choice Specialists Subject to the cover available in the Phase 1 Subject to available funds in MSA. Specialist Network Premier Rate Doctors / Freedom of Choice Premier Rate Doctors / Freedom of Choice Medication s Acute: Limited to funds available in Phase 1. Non-generic prescribed medicines will be paid at 100% of the Scheme rate. OTC: Limited to funds in Phase 1. Acute: Subject to available funds in MSA. OTC: Subject to available funds in MSA. Levy / Co-Payment None None Optical Limit Subject to available funds in Phase 1 Subject to available funds in MSA. Preventative s Screening at a Discovery Wellness Network Provider: Mammogram, pap smear, PSA, VCT, blood pressure, blood glucose, cholesterol and Body Mass Index. Paid from Major Medical Flu vaccines for members age 65+ & those with certain chronic conditions Screening at a Discovery Wellness Network Provider: Mammogram, pap smear, PSA, VCT, blood pressure, blood glucose, cholesterol and Body Mass Index. Paid from Hospital Flu vaccines for members age 65+ & those with certain chronic conditions 2

9 s Altron Medical Aid Discovery Health Medical Scheme Enhanced Classic Comprehensive Classic Priority Overall Annual Limit (OAL) Major Medical s Paid from Major Medical, unless otherwise stated Paid from Major Medical, unless otherwise stated Paid from Major Medical, unless otherwise stated Hospitalisation 100% of Scheme Rate: General Ward 200% of Scheme Rate: General Ward 200% of Scheme Rate: General Ward Deductibles Alternatives to Hospitalisation Specialists Following deductibles apply for in-hospital dental treatment: Day-clinic Age< 13 years: R700 Age 13 years: R2,400 Hospital Age< 13 years: R1,450 Age 13 years: R3, % of Scheme Rate Hospice / Terminal Care: Limited to 10 days per family per year Network Specialists: Paid at cost with no overall limit Other: Paid at 100% of Scheme Rate with no overall limit Following deductibles apply for in-hospital dental treatment: Day-clinic Age< 13 years: R700 Age 13 years: R2,400 Hospital Age< 13 years: R1,450 Age 13 years: R3, % of Scheme Rate H o s p i c e / Te r m i n a l C a r e : R 3 1, p e r p e r s o n p e r l i f e t i m e Premier Rate and Classic Direct Specialists: Paid at cost with no overall limit Other: Paid at 200% of Scheme Rate with no overall limit Deductibles ranging from R1,950 to R9,500 applicable to a defined list of in-hospital procedures The following deductibles apply for in-hospital dental treatment: Day-clinic Age< 13 years: R700 Age 13 years: R2,400 Hospital Age< 13 years: R1,450 Age 13 years: R3, % of Scheme Rate H o s p i c e / Te r m i n a l C a r e : R 3 1, p e r p e r s o n p e r l i f e t i m e Premier Rate and Classic Direct Specialists: Paid at cost with no overall limit Other: Paid at 200% of Scheme Rate with no overall limit General Practitioners (in-hospital) Paid at 100% of Scheme Rate with no overall limit Paid at 200% of Scheme Rate with no overall limit Paid at 200% of Scheme Rate with no overall limit Dental Surgery Maternity s Radiology and pathology Severe Dental and Oral Surgery - list of defined procedures: Severe Dental and Oral Surgery - list of defined procedures: no deductible + no overall limits. Subject to pre-authorisation no deductible + no overall limits. Subject to pre-authorisation and clinical entry criteria. and clinical entry criteria. Dental devices, appliances and orthodontic treatment Dental devices, appliances and orthodontic treatment (including related accounts for orthognathic surgery) (including related accounts for orthognathic surgery) paid at 100% of Scheme, subject to available funds in your phase. paid at 100% of Scheme Rate from the day-to-day benefit. Deductible payable for in hospital dentistry - younger than 13 Deductible payable for in hospital dentistry - younger than 13 years R700 at a day clinic, R1,450 in hospital. years R700 at a day clinic, R1,450 in hospital. 13 years and older 13 years and older R2,400 at a day clinic, R3,650 in hospital. R2,400 at a day clinic, R3,650 in hospital. Balance of hospital account paid at 100% of Scheme Rate. Balance of hospital account paid at 100% of Scheme Rate. Related accounts paid at 100% of Scheme Rate. Related accounts paid at 200% of Scheme Rate. Routine conservative dentistry such as preventative Routine conservative dentistry such as preventative treatments, simple fillings and root canal treatments from treatments, simple fillings and root canal treatments from available day to day benefits available day to day benefits Paid at 200% of the Scheme Rate in-hospital. Out-of -hospital paid from available day-to-day benefits Severe Dental and Oral Surgery - list of defined procedures: no deductible + no overall limits. Subject to pre-authorisation and clinical entry criteria. Hospital account paid at 100% of Scheme Rate. Related accounts paid at 200% of Scheme Rate. Dental devices, appliances and orthodontic treatment (including related accounts for orthognathic surgery) paid at 100% of Scheme Rate from day-to-day benefit. Deductible payable for in hospital dentistry - younger than 13 years R700 at a day clinic, R1,450 in hospital. 13 years and older R2,400 at a day clinic, R3,650 in hospital. Routine conservative dentistry such as preventative treatments, simple fillings and root canal treatments from available day to day benefits Paid at 200% of the Scheme Rate in-hospital Out-of hospital paid from available day-to-day benefits Specialised Radiology: MRI & CT Scans MRI/ CT scans R2,450 co-payment applies In & Out of Hospital: and paid from Major Medical if related to hospital admission Conservative Back & Neck treatment and scans unrelated to hospital admission: R2,450 co-pay paid from day-to-day benefits In & Out of Hospital: and paid from Hospital if related to hospital admission. Conservative Back & Neck treatment, scans unrelated to hospital admission and scans performed out-of-hospital: R2,450 co-pay paid from day-to-day benefits Specialised Procedures (Scopes) Chronic Medication Limit In Hospital: Hospital + Related accounts paid from Major Medical R2,300 co-pay paid from Day-To-Day Out of Hospital: Paid from Major Medical at 100% of the Scheme rate Formulary: Non Formulary: Chronic Drug Amount (CDA) In Hospital: Hospital + Related accounts paid from Major Medical R2,300 co-pay paid from day-to-day Out of Hospital: Paid from Major Medical at 200% of the Scheme rate Formulary: Non Formulary: Chronic Drug Amount (CDA) In Hospital: Hospital + Related accounts paid from Hospital, higher of either R2 600 co-pay or 4 levels of deductibles paid by member Out of Hospital: Paid from Hospital at 200% of the Scheme rate Formulary: Non Formulary: Chronic Drug Amount (CDA) Number of Chronic Conditions 47 conditions including the 27 PMB s 61 conditions including the 27 PMB s 27 PMB s Levy / Co-Payment Formulary: None Non Formulary: Difference in excess of Standard CDA Formulary: None Non Formulary: Difference in excess of Standard CDA Formulary: None Non Formulary: Difference in excess of Standard CDA DSP for Chronic Medication None None None Oncology Renal Dialysis Organ Transplants R400,000 for each family in a rolling 12-month period limited to tier 1 (as per state protocols) Network - 100% of Cost Other - 100% of Scheme Rate 100% of Scheme rate, subject to pre-authorisation, protocols apply authorised surgical admissions paid at 200% of Scheme rate 20% co-pay on all non-surgical Oncology-related costs exceeding R400,000 per 12 month cycle No co-pay on PMB s Network - 100% of Cost Other - 100% of Scheme Rate 200% of Scheme Rate authorised surgical admissions paid at 200% of Scheme rate 20% co-pay on all non-surgical Oncology-related costs exceeding R200,000 per 12 month cycle No co-pay on PMB s Network - 100% of Cost Other - 100% of Scheme Rate 200% of Scheme Rate Prostheses & Appliances Internal Prosthesis: Limited to R63,400 per family per year Hip, knee and shoulder joint prosthesis: Network - covered in full Non-network - R33,000 per prosthesis Spinal prosthetic devices: R23,000 per level, R46,000 for 2 or more levels, limited to 1 procedure per beneficiary per year External Appliances: Paid from day-to-day benefits and limited to R18,500 per year Hearing Aids: paid from Day-to-Day and limited to 1 x hearing aid every two years Internal Prosthesis: from Major Medical sub-limits apply: Cochlear and auditory brain implants: R155,000 for each person for each benefit Internal nerve stimulators: R117,000 per person Hip, knee and shoulder joint prosthesis:network - covered in full. Non-network - R33,000 per prosthesis Spinal prosthetic devices: R23,000 for 1st level, R46,000 for 2 or more levels, limited to 1 procedure per beneficiary per year External Appliances: Paid from day-to-day and limited to R50,000 per family per year Hearing Aids: paid from Day-to-Day and limited to R per family per year Internal Prosthesis: from Major Medical sub-limits apply: Cochlear and auditory brain implants: R155,000 for each person for each benefit Internal nerve stimulators: R117,000 per person Hip, knee and shoulder joint prosthesis:network - covered in full. Non-network - R33,000 per prosthesis Spinal prosthetic devices: R23,000 for 1st level, R46,000 for 2 or more levels, limited to 1 procedure per beneficiary per year External Appliances: Paid from day-to-day and limited to R50,000 per family per year Hearing Aids: paid from Day-to-Day and limited to R per family per year Mental Health and Substance Abuse Paid at 100% of the Scheme rate and limited 21 days for in-hospital treatment for each person for the year Paid at 200% of the Scheme rate and limited 21 days for inhospital treatment for each person for the year Paid at 200% of the Scheme rate and limited 21 days for inhospital treatment for each person for the year HIV/AIDS subject to Prescribed Minimum. Member must register on programme and must use the Designated Service Provider subject to protocols. Member must register on programme and must use the Designated Service Provider subject to protocols. Member must register on programme and must use the Designated Service Provider International cover No benefit International travel cover of 90 days limited to R5 million per beneficiary per journey for emergency claims Excesses apply on day-to-day claims Claims incurred outside of 90 day period and / or elective claims paid at the SA equivalent International travel cover of 90 days limited to R5 million per beneficiary per journey for emergency claims Excesses apply on day-to-day claims Claims incurred outside of 90 day period and / or elective claims paid at the SA equivalent 3

10 Out of Hospital s Paid from Phase 1, 2, 3 or 4 Savings Level (MSA)/ Day-to-day benefit Self Payment Gap (SPG) Threshold Level Above Threshold (ATB) General Practitioners Phase 1-20% of Total Contribution P R6,168 A R5,208 C R984 Phase 2-15% of Total Contribution P R4,630 A R3,910 C R736 P R10,803 A R9,123 C R1,718 Phase 3 paid at 100% of the Scheme rate P R13,889 A R11,729 C R2,209 Phase 4 and paid at 60% of the Scheme rate Subject to the cover available in the phase member is in. During Phase 2 (Self Payment Gap) or if other phases are exhausted, the Scheme funds unlimited network GP consultations Paid from Medical Savings Account or Above Threshold 25% of Total Contribution P R9,252 A R8,748 C - R1,848 P R1,123 A R1,627 C R102 P R10,375 A R10,375 C R1,950 subject to benefit sub-limits. Paid from the Medical Savings Account (MSA) or the Above Threshold (ATB). When member is in the Self Payment Gap (SPG), they have access to unlimited network GP consultations. These network GP consultations do not accumulate to the Annual Threshold. Network GP s: 100% of Cost. Non-Network GP s: No benefit in SPG 100% of Scheme Rate Paid from Medical Savings Account or Above Threshold 25% of Total Contribution P - R6,204 A - R4,884 C - R2,484 P - R2,966 A - R2,006 C - R516 P - R9,170 A - R6,890 C - R3,000 P - R7,800 A - R5,550 C - R2,680 Sub-limits apply Paid from the Medical Savings Account (MSA) or the Above Threshold (ATB). When member is in the Self Payment Gap (SPG), they have access to unlimited network GP consultations. These network GP consultations do not accumulate to the Annual Threshold. Network GP s: 100% of Cost. Non-Network GP s: No benefit in SPG 100% of Scheme Rate GP Network Discovery GP Network/Freedom of Choice Discovery GP Network/Freedom of Choice Discovery GP Network/Freedom of Choice Specialists Subject to the cover available in the phase member is in Paid from MSA/ ATB. Premier Rate Specialists: Paid at 100% of cost Non-Premier Rate Specialists: Paid at 100% of the Scheme rate Paid from MSA/ ATB. Premier Rate Specialists: Paid at 100% of cost Non-Premier Rate Specialists: Paid at 100% of the Scheme rate Specialist Network Premier Rate Doctors / Freedom of Choice Premier Rate Doctors / Freedom of Choice Premier Rate Doctors / Freedom of Choice Medication s Covers basic radiology only, excluding MRI/ CT scans. Subject to funds available in the phase member is in Paid from MSA/ ATB at 100% of the Scheme rate Paid from MSA/ ATB at 100% of the Scheme rate Levy / Co-Payment None None None Optical Limit Preventative s Limited to funds available in the phase member is in. Annual limit of R3,250 per beneficiary, including contact lenses Screening at a Discovery Wellness Network Provider: Mammogram, pap smear, PSA, VCT, blood pressure, blood glucose, cholesterol and Body Mass Index. Paid from Major Medical. Flu vaccines for members age 65+ & those with certain chronic conditions Limited to funds available in MSA/ ATB. Annual limit of R3,250 per beneficiary Screening at a Discovery Wellness Network Provider: Mammogram, pap smear, PSA, VCT, blood pressure, blood glucose, cholesterol and Body Mass Index. Paid from Major Medical. Flu vaccines for members age 65+ & those with certain chronic conditions paid from Major Medical Limited to funds available in MSA/ ATB. Annual limit of R3,000 per beneficiary Screening at a Discovery Wellness Network Provider: Mammogram, pap smear, PSA, VCT, blood pressure, blood glucose, cholesterol and Body Mass Index. Paid from Major Medical. Flu vaccines for members age 65+ & those with certain chronic conditions paid from Major Medical 2013 CONTRIBUTION RATES BY FAMILY COMPOSITION (Total Monthly Contributions) Altron Medical Aid Default option (ADL chronic conditions) Discovery Health Medical Scheme Default option (Non-ADL chronic conditions) Enhanced Classic Comprehensive Classic Priority Principle Principle + Adult Principle + Adult + Child Principle + Adult + 2 Children Principle + Adult + 3 Children Principle + 2 Adults Principle + 2 Adults + Child Principle + 2 Adults + 2 Children Principle + 2 Adults + 3 Children Principle + Child Principle + 2 Children Principle + 3 Children Altron Medical Aid Basic Discovery Health Medical Scheme Default option Classic Saver Principle Principle + Adult Principle + Adult + Child Principle + Adult + 2 Children Principle + Adult + 3 Children Principle + 2 Adults Principle + 2 Adults + Child Principle + 2 Adults + 2 Children Principle + 2 Adults + 3 Children Principle + Child Principle + 2 Children Principle + 3 Children Discovery Health Medical Schemes charges contributions for a maximum of 3 child dependants (under the age of 21 years). Refer to the Discovery Health Medical Scheme 2013 Plan Comparison for information on other benefit options available. Note that you can either remain on the default option or you can buy-down or buy-up depending on your personal needs and affordability. Disclaimer: This document is a summary of the key benefits and contributions of the Altron Medical Aid & selected plans on Discovery Health Medical Scheme. Full details can be found in the registered rules of both medical schemes. E&O.E. Designed by Alexander Forbes Financial Services Communications, 7737-Altron Medical Comparison

11 Plan Comparison Executive Plan Executive Comprehensive Series Classic Comprehensive Classic Delta Comprehensive Classic Comprehensive Zero MSA Essential Comprehensive Essential Delta Comprehensive Priority Series Classic Priority Essential Priority Saver Series Classic Saver Classic Delta Saver Essential Saver Essential Delta Saver Coastal Saver Core Series Classic Core Classic Delta Core Essential Core Essential Delta Core Coastal Core Critical hospital care Planned hospital care Chronic Illness Day-to-day medical care Screening and prevention KeyFIT KeyCare Series KeyCare Plus KeyCare Access KeyCare Core This brochure is intended for intermediary use. It is only a summary of the key benefits and features of the Discovery Health Medical Scheme plans, awaiting formal approval from the Council for Medical Schemes. Full details can be found in the Discovery Health Medical Scheme Rules on It also summarises other Discovery products and value-added services. For compliance questions, compliance@discovery.co.za. Discovery Health Medical Scheme, registration number 1125, is administered by Discovery Health (Pty) Ltd, registration number 1997/013480/07, an authorised financial services provider. Vitality is not part of the Discovery Health Medical

12 SUMMARY EXECUTIVE THE MOST EXTENSIVE COVER FOR IN-HOSPITAL AND DAY-TO-DAY BENEFITS private hospital cover and private ward cover Highest Medical Savings Account and an unlimited Above Threshold, which covers both in- and out-of-hospital claims Full cover for an exclusive list of chronic medicine Cover for medical emergencies when travelling in and outside South Africa COMPREHENSIVE CLASSIC ZERO MSA CLASSIC ESSENTIAL COMPREHENSIVE COVER FOR IN-HOSPITAL AND DAY-TO-DAY BENEFITS private hospital cover A choice of a high or no Medical Savings Account and an unlimited Above Threshold Comprehensive cover for chronic medicine Cover for medical emergencies when travelling in and outside South Africa Hospitals cover at any private hospital and private ward cover of up to R1 300 each day HOSPITAL COVER Upfront payments No upfront payments to hospitals Specialists we have an Cover is subject to funds in Medical Savings Account or Above Threshold agreement with Specialists we do not have an agreement with Other healthcare professionals 100% Radiology and pathology cover at any private hospital cover Full cover on Delta when using the Delta Hospital Network of private hospitals For planned admissions outside of the Delta Hospital Network, an upfront payment of R5 000 must be paid to the hospital Full Cover 300% 200% 100% 200% 100% 100% MRI and CT scans Conditions Medicine cover If done as part of an approved admission, we pay the hospital account from your Hospital and all related accounts from the Medical Savings account or Above Threshhold benefit Scans not related to your admission will be paid from your day-to-day benefits at 100% of the Discovery Health Rate If done as part of an approved admission, we will pay up to 100% of the Discovery Health Rate from the Hospital Covered once you reach your Annual Threshold If not related to your admission or if for conservative back or neck treatment, we pay the first R2 450 of the scan from your day-to-day benefits. We pay the balance of the scan from your Hospital, up to 100% of the Discovery Health Rate CHRONIC ILLNESS BENEFIT You have cover for conditions according to the Prescribed Minimum s list and on our Additional Disease List. Your condition needs to be approved in order to be covered Full cover for approved medicine on Discovery Health s most extensive medicine list. If you choose to use medicine that is not on our list, you have a set monthly amount available that is higher than that of our other plans. Full cover for an exclusive list of medicines only available on this plan. ONCOLOGY Full cover for approved medicine on Discovery Health s medicine list. If you choose to use medicine not on our list, we will pay it up to a set monthly amount. Covers first R of approved cancer treatment in full over a 12-month cycle Co-payments You will be required to pay 20% of the cost on all further treatment once costs for cancer treatment go over R Healthcare professionals Medical Savings Account Self-payment gap Paid up to 100% of the Discovery Health Rate DAY-TO-DAY BENEFITS Covers day-to-day medical expenses like GP visits, radiology and pathology at the rate the healthcare professional charges If you run out of money in your Medical Savings Account before your claims add up to the Annual Threshold, you will have to pay for your medical expenses This plan does not offer this benefit You pay all day-to-day medical expenses until you reach your Annual Threshold Pays for day-to-day medical expenses like GP visits, radiology and pathology as long as you have money available If you run out of money in your Medical Savings Account before your claims add up to the Annual Threshold, you will have to pay for your day-to-day medical expenses Pays for certain day-to-day benefits after you have run out of money in your Medical Savings Account and before you reach the Annual Threshold Insured Network GP consultations, day-to-day generic medicines (above schedule 3) and blood tests will be covered if you use a provider in our network This plan does not offer this benefit GP consultations, day-to-day generic medicines (above schedule 3)* and blood tests* will be covered if you use a provider in our network *On Classic and Classic Delta only Above Threshold MRI and CT scans Screening and Prevention Trauma Recovery Extender Specialised Medicine and Technology Overseas Treatment Allied, Therapeutic and Psychology Extender Paid from your available Medical Savings Account or Above Threshold The Above Threshold is unlimited ADDITIONAL BENEFITS Covered once you reach your Annual Threshold We pay the first R2 450 of your MRI or CT scan from your day-to-day benefits. We cover the balance of the scan from your Hospital, up to the Discovery Health Rate (except for conservative back and neck scans, where specific rules apply). Covers certain tests at a Discovery Wellness Network provider, like blood glucose, blood pressure, cholesterol and body mass index. We also cover a mammogram, Pap smear, PSA (a prostate screening test) and HIV screening tests. Members 65 years or older and members registered for certain chronic conditions are also covered for a seasonal flu vaccine. Out-of-hospital claims for recovery after certain traumatic events are covered on this benefit for the rest of the year in which the trauma took place, and a year after the trauma This plan does not offer this benefit Cover up to R for each person for a defined list of the latest and most advanced treatments Up to R for each person if they travel to seek evidence-based healthcare treatment not available in South Africa. A co-payment of 20% and specific rules apply to this benefit. Out-of-hospital claims for recovery after certain traumatic events are covered on this benefit for the rest of the year in which the trauma took place, and a year after the trauma Provides unlimited cover for a list of allied healthcare services, like physiotherapy. This unlimited cover is for a defined list of conditions, for example quadriplegia and cerebral palsy. Cover depends on your condition and the criteria for it.

13 PRIORITY SAVER CLASSIC ESSENTIAL CLASSIC ESSENTIAL COASTAL SUMMARY COST-EFFECTIVE IN-HOSPITAL AND DAY-TO-DAY BENEFITS private hospital cover Essential cover for chronic medicine A Medical Savings Account and a limited Above Threshold Cover for medical emergencies when travelling in and outside South Africa ECONOMICAL IN-HOSPITAL AND DAY-TO-DAY BENEFITS private hospital cover Essential cover for chronic medicine A Medical Savings Account Cover for medical emergencies when travelling in and outside South Africa Hospitals Upfront payments to hospitals Specialists we have an agreement with Specialists we do not have an agreement with Other healthcare professionals Radiology and pathology cover at any private hospital HOSPITAL COVER An upfront payment of between R1 950 and R9 500 must be paid to the hospital when you are admitted for a defined list of procedures Full cover cover at any private hospital Full cover on Delta when using Delta Hospital Network of private hospitals For planned admissions at hospitals outside of the Delta Hospital Network, an upfront payment of R5 000 must be paid to the hospital 200% 100% 200% 100% 200% 100% 200% 100% 100% cover at any coastal private hospitals If a coastal hospital is not used, a payment of up to 70% of the hospital account is paid and you must pay the difference If done as part of an approved admission, we will pay up to 100% of the Discovery Health Rate from the Hospital MRI and CT scans Conditions Medicine cover If not related to your admission, we pay the first R2 450 of the scan from your day-to-day benefits. We pay the balance of the scan from the Hospital up to 100% of the Discovery Health Rate. If for conservative back and neck treatment, you have to pay the first R1 950 of the hospital account and we pay the first R2 450 of the scan from your day-to-day benefits. We pay the balance of the scan from the Hospital up to 100% of the Discovery Health Rate If not related to your approved admission or if for conservative back or neck treatment, we pay the first R2 450 of the scan from your day-to-day benefits. We pay the balance of the scan from your Hospital, up to 100% of the Discovery Health Rate. CHRONIC ILLNESS BENEFIT You have cover for conditions according to the Prescribed Minimum s list. Your condition needs to be approved in order to be covered Full cover for approved medicine on Discovery Health s medicine list. If you choose to use medicine not on our list, we will pay it up to a set monthly amount. ONCOLOGY Covers first R of the approved cancer treatment in full over a 12-month cycle Co-payments You will be required to pay 20% of the cost on all further treatment once costs for cancer treatment go over R Healthcare professionals Medical Savings Account Self-payment gap Insured Network Above Threshold MRI and CT scans Screening and Prevention Trauma Recovery Extender Specialised Medicine and Technology Overseas Treatment Allied, Therapeutic and Psychology Extender Paid up to 100% of the Discovery Health Rate DAY-TO-DAY BENEFITS Pays for day-to-day medical expenses like GP visits, radiology and pathology as long as you have money available If you run out of money in your Medical Savings Account before your claims add up to the Annual Threshold, you will have to pay for your day-to-day medical expenses Pays for certain day-to-day benefits after you have run out of money in your Medical Savings Account and before you reach the Annual Threshold GP consultations, on Classic and Essential. Blood tests on Classic only. You must use a provider in our network The Above Threshold * is limited Main member R7 800 Adult R5 550 Child dependant R2 680 We pay the first R2 450 of the scan from your day-to-day benefits. We pay the balance of the scan from the Hospital up to 100% of the Discovery Health Rate ADDITIONAL BENEFITS Pays for day-to-day medical expenses like GP visits, radiology and pathology as long as you have money available You need to pay claims when your Medical Savings Account runs out Covers GP consultations in our network up to a limit depending on your plan type and family size These plans do not offer this benefit We pay the first R2 450 of MRI or CT scan from your available Medical Savings Account. We cover the balance of the scan from your Hospital, up to the Discovery Health Rate. For conservative back and neck scans, specific rules and limits may apply. Covers certain tests at a Discovery Wellness Network provider, like blood glucose, blood pressure, cholesterol and body mass index. We also cover a mammogram, Pap smear, PSA (a prostate screening test) and HIV screening tests. Members 65 years or older and members registered for certain chronic conditions are also covered for a seasonal flu vaccine. Out-of-hospital claims for recovery after certain traumatic events are covered on this benefit for the rest of the year in which the trauma took place, and a year after the trauma These plans do not offer these benefits * If you join the medical scheme after January, you wont get the full amount because it is calculated by counting the remaining months in the year.