Your medical scheme is absorbing your pay increase

An 8% increase in medical scheme contributions can absorb nearly 40% of a salary hike.

Consider a household with R30 000 in monthly take-home income and a R6 000 medical scheme contribution. A 4.1% income increase adds R1 230 a month, while an 8% increase in the medical scheme contribution raises the monthly bill from R6 000 to R6 480, costing an extra R480. That leaves R750 to cover other rising bills, or to improve the family’s financial position. The gap is visible in the data.

According to Stats SA, average formal-sector earnings grew by 4.1% in the year to May 2026. Consumer inflation reached 4.5% in September.

Read: Why your bills are rocketing beyond inflation

Some medical scheme increases for 2027 look gentler against recent history. Discovery Health Medical Scheme announced a weighted average increase of 8.2%, compared with 9.3% for 2025. Bestmed announced 7.35%, against 12.75% in 2025. Individual options differ, and announced changes remain subject to regulatory approval.

Read: Bonitas reinforces commitment to healthier outcomes with its 2027 product offering Discovery to increase medical aid contributions by as much as 8.9%

These are smaller percentage increases applied to already higher bills.

A lower headline number can, therefore, offer little relief when income is struggling to keep pace.

Contributions are due every month, even if a bonus disappoints or commission income falls.

Healthcare should thus be budgeted against dependable income rather than a hoped-for increase.

The Consumer Price Index (CPI) measures price changes across a broad basket of consumer goods and services. Scheme contributions reflect healthcare prices and the amount of care members use. An ageing member pool, more chronic illnesses, and expensive new treatments raise claims.

The Council for Medical Schemes reports that benefits paid rose 8.5% to R259.3 billion in 2024, while beneficiary numbers grew by just 0.45%.

Read/listen: Why medical aid costs increase above inflation Households cannot keep absorbing medical aid hikes, funders warn Medical aid costs: Can prescribed minimum benefit reform bring relief?

Community rating spreads these costs across members without individually pricing them based on health. If younger, healthier people leave due to affordability, the remaining member pool can become more costly to fund. Financial pressure can, therefore, help generate the next increase.

When households reduce retirement saving to preserve cover, part of today’s healthcare bill is paid with tomorrow’s wealth.

Read: Your medical aid increases at 9% a year – your retirement fund probably doesn’t

A depleted emergency fund or more borrowing can also make the next financial shock harder to absorb.

The full cost, therefore, includes lost investment growth or interest on borrowing, as well as the contribution itself.

Medical inflation compounds in retirement

Healthcare deserves its own inflation assumption in a financial plan.

Stress-testing CPI plus three to four percentage points can reveal the funding gap, although actual increases will vary.

At 8% annually, contributions double in about nine years.

Suppose contributions increase by 8% and retirement income by 4.5% each year. A contribution consuming 15% of income at 65 would absorb roughly a third of income by 90, even without switching to a more expensive option.

Read: Healthcare in retirement: Planning for the rising cost of staying healthy

An employer subsidy that ends at retirement can further increase the pressure. A retirement plan that inflates every expense at CPI can overstate how comfortably its income will support you.

An annual medical scheme comparison should assess what you will pay over the whole year, including likely out-of-pocket expenses. Check benefit limits, hospital and specialist networks, chronic medicine cover, and co-payments against your claims history and changing needs.

A smaller monthly contribution may leave you exposed to a larger bill when you need treatment.

Also, check your scheme’s deadline for option changes, which generally take effect in January. Reviewing early gives you time to arrange a suitable change without an avoidable break in membership.

A review may also confirm that your current option remains appropriate. Its value is the decision it supports, whether you stay or move.

Listen/read: Navigating medical scheme annual increases Medical aid options: Stay put, switch or upgrade? Choosing medical aid: What to look for beyond the price

Stability means maintaining suitable, affordable cover through considered adjustments. Cancelling in frustration can make returning costly: Waiting periods may apply, and applicants aged 35 or older with insufficient prior cover can face late-joiner penalties.

An accredited healthcare advisor can help you to assess the trade-offs. The aim is to preserve access to care while protecting the savings that will have to fund it long after your last salary.

Dr Francois Stofberg is a financial well-being economist at the Efficient Group.

Medical aid is just another indirect tax. All of the additional “taxes” that we pay are to compensate for government failure. One can reel them off, school fees, private security, the list goes on and on. Leaving less and less money for the real economy – i.e. for my wife to spend at Woolies.

Some of the world’s largest investors have said they will object.