How does payment work if you have been medically boarded?

The long answer

If your mother has been receiving her salary while she was off work, her employer can put in a claim to the insurer for repayment of the salary she received.

Labour Guide says that the standard that an employer must follow in dealing with an employee who is permanently incapacitated, as your mother is, is one of “reasonable” accommodation. 

Buddies for Life says that “medical boarding” is a term mostly used by life insurance companies. They say that medical boarding is only considered when an individual is a member of a fund or scheme that provides disability benefits. The individual will have to prove that they are unable to work. They say that the bar for medical boarding is set “quite high” and that very often the insurer is looking for definite proof that the person will never be able to work again. 

If the insurer agrees with the claim, they will pay the person a monthly stipend – whatever amount the policy provides for.

Buddies for Life also says that if you aren’t covered by such a fund or scheme, medical boarding is not an option.

You would need to find out whether your mother has such an insurance policy, and if she doesn’t, is she a member of a pension or provident fund?

Old Mutual says that after the Taxation Law Amendments Act came into effect on 1 March 2022, the rules changed for provident funds: what it means is that it is no longer possible for provident fund members to take their whole disability benefit as a lump sum if they are declared disabled, and a portion of it may have to be paid out as a monthly benefit.

Old Mutual says that when it comes to lump-sum disability benefits, the definition of what a disability is, is very strict and will be set out in the fund documents. They say that what it generally means is that a member of the fund must be unable to do any occupation they are qualified for, and it is the insurer who decides if the member qualifies or not.  

Old Mutual goes on to explain that both their fund and the law say that a fund member who has to leave their work because of ill health is entitled to a retirement benefit. So, if you qualify to receive a disability benefit. It will be treated as a retirement benefit, which means you can no longer take it all as a lump sum, but a portion may have to be paid out as a monthly income.

Abrahams & Gross says that an employee may also directly apply to be medically boarded through the fund or scheme they belong to. The relevant forms must be requested from the specific fund/scheme and completed by the employee. The employee’s application to be medically boarded must have a doctor’s report motivating the reason for permanent incapacity.

So if your mother belongs to a fund like a pension or provident fund, she can apply to the fund to be medically boarded. 

(Disability claimants are not entitled to claim illness benefits from the UIF if they are receiving a disability income from an occupational fund.)

It seems that companies mostly have a policy that is linked to the pension or provident fund. The insurer will decide whether to approve the claim or not. If the employer cannot find another job for her that she could do, they have to dismiss her – it’s known as a “no-fault dismissal” – and is called “termination due to ill health”. The risk is, though, as one person wrote in an online letter, what if the company terminates your services and the insurer does not approve your claim?

In that case, your mother could apply for a SASSA disability grant: she must be a South African citizen and be resident in South Africa and be between 18 and 59 years old. As from 1 April 2024, the disability grant is now R2,180 per month.

These are the documents she would need to present to SASSA:

• Her 13-digit bar-coded identity document (ID)

• A medical report and functional assessment report, by a medical practitioner recognised by SASSA, confirming her disability. Her medical assessment must not be older than 3 months at the date of application. (A GroundUp article expands on this: she needs to undergo a medical examination where a doctor appointed by the state will assess the degree of her disability; bring along any previous medical records and reports when she makes the application and have the assessment with her.)

• Proof of marital status (if applicable)

• Proof of residence

• Proof of income or dividends (if any)

• Proof of assets, including the municipal value of your property

• Proof of private pension (if any)

• Her bank statements for the past three months

• Unemployment Insurance Fund (UIF) document ("blue book") or discharge certificate from her employer.

SASSA says: “Your application form will be completed in the presence of an officer from SASSA. If SASSA does not approve your application, you will be given valid reasons why the application has been declined in writing. You have the right to ask SASSA to reconsider your application, if you’re unhappy with their decision. You can also appeal to the Minister of Social Development in writing, explaining why you disagree. This appeal must be lodged within 90 days of you being informed of the outcome of your initial application.”

So, perhaps the first thing to do is get a copy of the pension or provident fund rules from the Human Resources (HR) department at your mother’s work. Also ask them to explain exactly how the insurer works with the fund and ask for advice on the best way forward for your mother.

Wishing you the best,
Athalie