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

The Council for Medical Schemes (CMS) has issued warnings for 2027, urging medical schemes to limit contribution increases to 3.8% plus reasonable utilisation estimates, mirroring projected inflation. The advisory body is concerned that medical scheme contributions rising faster than inflation could strain household finances and render medical cover less affordable, especially for younger members.

Schemes seeking to hike contributions beyond the 3.8% CMS benchmark will need to present detailed business plans backed by solid financial and actuarial evidence.

To ease the burden of the cost-of-living crisis, exacerbated by high fuel prices, the CMS suggests medical scheme contribution increases and cost assumptions for the 2027 benefit year should be anchored at 3.8%, with any extra solvency provisions justified by each scheme's financial health. This recommendation aligns with the South African Reserve Bank's projected consumer price index (CPI) for 2027, as detailed in the July 2026 Monetary Policy Committee statement.

The CMS bases its recommendation on salary inflation as a gauge for evaluating the affordability of annual contribution increases. Although private medical inflation typically outpaces CPI by 2 to 3 percentage points, the CMS maintains that industry cost increase assumptions should still be linked to inflation. The regulator warns that excessively high contribution rates can also hinder new entrants, potentially jeopardising the industry's long-term viability.

The CMS acknowledges that some medical schemes may need contribution increases surpassing the CMS's suggested inflation-linked benchmark. In such instances, trustees must submit comprehensive business plans that include clear financial and actuarial justification, adhering to the guidelines in Advisory Practice Note (APN 303) on the adequacy of contributions, issued by the Actuarial Society of South Africa (ASSA).

The CMS insists that any contribution increases above its recommended benchmark must be supported by evidence demonstrating the necessity of the additional increase.