Paying more for medical aid? CMS has a warning for 2027 - IOL

The Council for Medical Schemes has recommended that medical scheme contribution increases for 2027 be anchored at 3.8%, in line with projected inflation.

The Council for Medical Schemes (CMS) has published recommendations for 2027 that call for medical scheme contribution increases to be anchored at 3.8% plus reasonable utilisation estimates, in line with projected inflation.

The recommendations come as the CMS warns that above-inflationary medical scheme contribution increases are placing growing pressure on household finances and could make medical scheme cover less affordable, particularly for younger members.

CMS said schemes that propose increases above the 3.8% benchmark will need to submit comprehensive business plans supported by clear financial and actuarial evidence.

"To cushion households grappling with the cost-of-living crisis, which has been amplified by elevated fuel prices, the CMS recommends that contribution increases and cost assumptions for the 2027 benefit year be anchored at 3.8%, with any additional provision for solvency requirements being supported by each scheme's financial position".

"Solvency needs and demographic risk profile. The recommendation is aligned with the South African Reserve Bank's 2027 CPI projections, as outlined in the July 2026 MPC statement."

The council added that it "uses salary inflation as a proxy measure for assessing the affordability of annual contribution increases", adding that although private medical inflation generally exceeds CPI by between 2 and 3 percentage points, the CMS believes that industry cost increase assumptions should remain linked to inflation.

It warned that high contribution rates can also serve as a barrier to entry, particularly for younger beneficiaries, posing a risk to the long-term sustainability of the industry.

"The Registrar is also cognisant that some medical schemes may require contribution increases above the CMS's recommended CPI-linked benchmark.

"In such cases, Trustees must submit a comprehensive business plan supported by clear financial and actuarial justification. The business plan must fully comply with the requirements of Advisory Practice Note (APN 303) on the adequacy of contributions, as issued by the Actuarial Society of South Africa (ASSA). "

The CMS said contribution increases above its recommended benchmark must be supported by evidence showing why the additional increase is necessary.