The Retirement Benefits Authority (RBA) allowed new regulations to allow stand-alone companies to operate post-retirement medical funds
Dubbed Post-Retirement Medical Funds (PRMFs), the rules will see retirement medical schemes operate without the need to be entrenched in pension funds.
This regulatory move is aimed at enabling more people to access quality healthcare services after retirement.
Previously, such funds were operated by pension schemes as a special fund since their introduction in 2018.
This means that members whose pension schemes did not wish to explore the medical insurance space were locked out from saving for their healthcare insurance during their working years.
The pension regulator will oversee the accumulation of contributions and management of the funds while the Insurance Regulatory Authority (IRA) will oversee the payments through medical services providers.
The PRMFs shall be required to appoint a corporate trustee to manage the fund and may seek actuarial expertise in design and funding.
In addition, the funds shall be required to have registered within the country.
Speaking at a conference organised by Enwealth Financial Services in Nyeri, Anne Mugo, RBA chief manager for Market Conduct said the provision is in response to requests from the market.
"The previous regulation was only allowing you to contribute to your own scheme but we were informed that some schemes do not want to set up medical funds so they are denying their members this benefit,"
A survey conducted by Strathmore University and Enwealth Financial Services in May last year showed great distress among retirees attributed to huge medical expenses they have to incur.
It, for instance, revealed that 41 per cent of the retirees reported they had to pay cash for their medical bills, only 32 per cent had medical insurance while 20 per cent were under National Hospital Insurance Fund (NHIF).
Enwealth Financial Services CEO Simon Wafubwa welcomed the move by RBA, saying medical insurance cover is one of the key pillars to a successful retirement.
According to statistics, 60 per cent of an individual’s medical expenses are incurred after the retirement age as this age group is highly vulnerable to diseases and the need for hospitalization increases.
Over the years, there has been a push from the market for Post-Retirement Medical funds, where members voluntarily contribute to medical insurance in their post-retirement years to ease the high dependency ratio.
According to RBA, retirees under Post-retirement medical schemes will be covered for pre-existing and high-risk conditions, an area that most insurers shy away from or charge extremely high premiums.