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Circular 16 of 2024: Updated Demarcation Exemption Renewal Framework

The Council for Medical Schemes (CMS) would like to inform the industry that, at the direction of the Minister of Health, the Exemption Renewal Framework for insurers conducting the business of a medical scheme has been extended by one year. The new period will now run from 1 April 2024 to 31 March 2025.


On 23 December 2016, the Minister of Finance with the concurrence of the Minister of Health published the Demarcation Regulations. The Demarcation Regulations provide that certain insurance policies have elements of the business of a medical scheme and are classified as “health policies” and/or “accident and health policies”, whilst excluding primary healthcare products and hospital indemnity products. The Demarcation Regulations became effective on 1 April 2017 and as a result, any provider of primary healthcare products and hospital indemnity products is deemed to be conducting the business of a medical scheme, as defined in terms of section 1 of the Medical Schemes Act (131 of 1998) (MSA).

The CMS, in consultation with the National Department of Health (NDOH), the National Treasury (NT) and the then Financial Services Board engaged and concluded an Exemption Framework. The Exemption Framework served as a guideline to providers of insurance products that conduct the business of a medical scheme, who wished to apply for exemption in terms of section 8(h) of the MSA, from compliance with the provision of section 20(1). The Exemption Framework was a transitional arrangement whilst the NDOH led the development of a Low-Cost Benefit Option (LCBO) Guideline for medical schemes, valid for two years, from 1 April 2017 to 31 March 2019. The exemption framework provided for the protection of existing policyholders on these insurance products which would be affected by the Demarcation Regulations as of 31 March 2017.

Due to delays in the finalisation of the LCBO Guideline, the CMS issued a Renewal Exemption Framework, with the relevant input from the NDOH, NT, Financial Sector Conduct Authority (FSCA), and the Prudential Authority (PA). The Renewal Framework, which sets the same exemption criteria for the insurers conducting the business of a medical scheme, was effective from 1 April 2019 to 31 March 2021. However, due to the impact of COVID-19 and the inability to engage stakeholders, the Council extended the exemption period by another year, to 31 March 2022.

Considering the establishment of the CMS Advisory Committees as well as the relevant workstreams flowing from the Advisory Committees, the Council, with input from the NDOH, NT, FSCA, and the PA, agreed on the automatic extension of the exemption period by a further two years, from 1 April 2022 to 31 March 2024.

Download the Circular here

Download the Exemption Framework here