South Africa’s private healthcare landscape is under tremendous cost and supply pressures, forcing many consumers to rethink how they structure their healthcare financial plan to keep it affordable without sacrificing quality and access.
The pressure on medical schemes and members is compounded by sharply rising healthcare provider costs. Stats SA reports that healthcare inflation reached 4.7% in August 2025, compared to a CPI of 3.3%. While most medical schemes have announced single-digit contribution increases for 2026 and are working hard to balance increasing provider costs against premium affordability, the financial strain on consumers remains challenging.
According to Jacqui Nel, Business Unit Head of Healthcare at Aon South Africa, medical schemes are under tremendous pressure to balance increasing healthcare provider costs, the growing prevalence of chronic conditions and ageing membership with sustainability and affordability. “Claims ratios remain in the high 80s, and post-Covid claims levels have exceeded pre-pandemic norms. At the same time, many schemes are facing an ageing member population with much higher utilisation and costs as the cross-subsidisation model between younger and healthier members and those with greater healthcare needs is declining.
“Many schemes have been using their solvency reserves to absorb these costs and cushion the blow to members, which in turn has reduced their solvency by around 3% year-on-year. With the regulatory minimum solvency requirement at 25%, the contributions for 2026 reflect what is needed to keep schemes stable and solvent and protect members against adverse claims experience,” explains Jacqui.
“The inevitable result is an erosion in benefits, even though premiums are increasing, which means that members are faced with greater self-funding gaps, especially on lower benefit options due to co-payments, penalty fees, exclusions and shortfalls. While the cost of medical scheme membership consumes a significant portion of monthly disposable income, it also remains a non-negotiable safety net for many families given the perilous state of the public healthcare system,” she adds.
Medical Schemes have announced lower 2026 increases than seen in previous years, by innovating in digital health, preventive care and data-driven healthcare management which provides for highly personalised health pathways and smarter benefit design. “Members who invest the time in understanding their benefit options and rewards programmes, commit to healthier lifestyles and preventative health checks, can unlock significant added value that not only eases the financial strain, but also improves their health outcomes,” says Jacqui.
Healthcare Funding is Complex: Get professional advice to fully understanding the terms of cover
Planning your healthcare funding strategy is best guided by the expertise and insights of a professional healthcare broker to strike the balance between affordability with adequate cover, ensuring that you have access to quality healthcare when you need it most. Jacqui provides the following insights into some of the important considerations that go into planning and managing your private healthcare funding strategy:
- Updated medical schemes plan information for 2026 is now available. Check for changes in benefits such as adjustments in coverage and limits, changes to hospital networks, limits on specialist visits or increased co-payments for certain procedures. Some plans may restrict you to a network of hospitals, which is an indication that the medical scheme has negotiated better pricing and outcomes in the interest of their members.
- If you are downgrading cover to a lower benefit option, understand that you will receive less cover and benefits. Find out what those benefit reductions are, how your access to healthcare and designated healthcare providers is affected and the implications for your pocket due to the likely increase in out-of-pocket healthcare expenditure. Some entry-level benefit options may appoint state hospitals as designated service providers for specific PMB conditions. An example could be a restriction on cover for joint-replacement prosthetics – such as hip or knee replacements – which would mean that these procedures are covered when administered at a state hospital or PMB level of care only, which could include oncology PMB level of care only, understanding the implications of these finer print inserts is critical.
- Benefit options that only pay for hospitalisation can have a big impact on your pocket. If the core benefit only covers hospitalisation you will need to self-fund your day-to-day primary care such as GP visits, dentistry, optometry, acute/chronic medication and so on. As an alternative, consider adding on an affordable health insurance policy that provides day-to-day primary healthcare options such as doctor visits and medication within a managed network of providers.
- Check whether your benefit option provides the flexibility to upgrade due to life changing health events. You may be healthy now, but no one knows what the future holds. If you do face a life changing health event – such as a cancer diagnosis – check whether your medical scheme option allows you to upgrade cover if required, or if you would have to wait for the year-end renewal period to exercise this option.
- If you are changing to another benefit option, move within the same medical scheme to avoid waiting periods. Most schemes will allow a buy-down on benefit option at any time during the year. If you do move to another medical scheme entirely, understand that underwriting may be imposed such as waiting periods anywhere from 3-12 months on certain conditions/claims.
- Get Gap Cover. Medical scheme benefits often don’t cover the full cost of hospitalisation or specialist procedures. Gap cover is a short-term insurance product that covers the difference between what your medical scheme pays and what the healthcare provider charges. For example, if your medical scheme pays specialists at 200% of tariff, but your healthcare provider charges at 500%, you will be liable for the shortfall of 300% from your own pocket if you do not have gap cover in place. Most medical schemes also have deductibles and co-payments and many members are left out pocket when hospitalised due to these shortfalls.
- While some employer groups still offer medical scheme benefits, as part of their employee benefits package, it is often not compulsory and employees can opt out. Think long and hard before doing so. Fully understand the implications of declining an employer medical scheme offering, prior to doing so. If you choose to join the medical scheme at a later stage, you will have to be underwritten afresh, which could deviate substantially from the initial package offered in terms of underwriting and coverage with waiting periods.
- Consider Primary Health Insurance for day-to-day primary care. Primary health provides structured insurance benefits for everyday healthcare needs. A common misconception is that it is an ‘either or’ scenario between a medical scheme option and health insurance, where a primary health insurance plan is a useful companion for individuals who may only have a basic hospital benefit option with their medical scheme. Health insurance for your day-to-day, out of hospital care is an affordable way to manage primary healthcare expenses separately, giving you access to network doctors and dentists, acute and chronic formulary medication, radiology, pathology, optometry and even cover for specialists on a managed basis when referred by a network GP.
Why the Interplay Matters
There is a definite hybrid trend by consumers and healthcare brokers to leverage the synergies between core medical scheme benefits, gap cover and health insurance in a cohesive and complimentary approach. No single solution suits everyone’s unique healthcare needs and budget.
Jacqui stresses the importance of seeking expert advice on structuring a healthcare funding plan that takes an integrated approach to ensuring your access to quality private healthcare, from your primary, day-to-day needs through to hospitalisation and specialist care.
“In a world where affordability and access to quality care are key, structuring your healthcare funding plan intelligently means achieving the right blend of cover, benefits and cost. In weighing up the essential versus non-essential aspects of your healthcare plan, your professional broker’s knowledge and impartial advice will shine a light on the way forward, explain the pros and cons of every potential scenario, ensuring that you can make better decisions about your healthcare financial planning for today and the future,” Jacqui concludes.
