BUSINESS NEWS - As medical schemes prepare to announce their contribution increases for 2027, South African households face another challenge in balancing healthcare costs with other financial commitments.

The Council for Medical Schemes has recommended that contribution increases be anchored at 3.8%, with a reasonable allowance for increased healthcare utilisation. 

However, many schemes are expected to exceed this level as medical inflation, claims costs and demand for healthcare services continue to put pressure on the industry.

For households already dealing with rising living costs and high fuel prices, the prospect of higher medical aid contributions may prompt difficult decisions about monthly budgets.

Will-John Keevy, Provincial Head at Momentum Financial Planning, cautions that cancelling medical aid to save money in the short term could expose households to substantially greater financial risks later.

Medical aid should be viewed as an important part of a broader financial protection strategy, rather than simply another monthly expense. 

Appropriate healthcare cover can help protect savings and income against unexpected medical costs, while financial advice can help households balance these expenses against their other obligations and long-term goals.

The financial impact of serious illness

Most financial plans depend on a degree of stability: income continues, savings grow and expenses remain manageable. A serious illness can disrupt all three.

Cancer illustrates the potential financial consequences. The International Agency for Research on Cancer estimated that approximately 102,000 South Africans were newly diagnosed with cancer in 2024, while about 241,000 people were living with the disease.

Projections from the Global Burden of Disease study suggest that annual cancer deaths in South Africa could nearly double by 2050, driven largely by an ageing population and changing lifestyles.

Beyond the personal toll, treatment can place considerable pressure on household finances. Specialist consultations, surgery, medication and ongoing treatment can result in substantial costs, particularly when care extends over a long period.

Momentum Life Insurance's claims data shows that critical illness payouts increased by more than 15% in 2025, exceeding R1 billion for the first time. Cancer accounted for 43% of these claims and was also the leading cause of lump-sum disability claims, at 27%.

Advances in medical treatment mean that many people now survive serious illnesses, but recovery can bring its own financial challenges. Treatment, rehabilitation and ongoing care may coincide with reduced earnings or an inability to work.

Without medical aid, households may have to rely on emergency savings, take on debt or withdraw money intended for retirement to meet healthcare expenses. In doing so, they risk solving an immediate financial problem at the expense of their future security.

Understanding the different layers of protection

Medical aid remains an important component of financial planning because it helps cover eligible healthcare expenses, particularly hospital admissions and serious illnesses. Registered medical schemes must also provide cover for Prescribed Minimum Benefits, subject to the applicable legislation and scheme rules.

However, medical aid does not necessarily cover every expense in full. Understanding the limits of a particular option is therefore essential.

Gap cover can help with certain shortfalls when healthcare providers charge more than a medical scheme pays, subject to the policy's terms and limits. Critical illness cover, meanwhile, provides a lump-sum payout following a qualifying diagnosis. This money can be used for expenses not covered by medical aid, household adjustments, additional care or income replacement during recovery.

Momentum Life Insurance's claims data highlights a potential protection gap: 87% of its clients who died from cancer or cardiovascular conditions in 2025 did not have critical illness cover in place with Momentum.

While these figures relate specifically to the insurer's clients, they underline the importance of reviewing whether existing protection would be sufficient to support a household through a serious illness.

Why downgrading may be better than cancelling

For households under financial pressure, reducing healthcare costs may be necessary. However, cancelling medical aid altogether is not the only option.

Moving to a more affordable scheme option could help reduce monthly contributions while retaining some level of protection. The most appropriate choice will depend on a household's healthcare needs, financial circumstances and ability to absorb out-of-pocket expenses.

Before making a change, Keevy recommends reviewing the contribution increases and benefit changes announced for 2027, as well as assessing whether the current option remains suitable.

Important considerations include cover for chronic medication, planned procedures, growing children and anticipated changes in family circumstances. Members should also assess whether they are paying for benefits they seldom use or whether a cheaper option would leave them exposed to expenses they could not comfortably afford.

Cancelling cover may have further consequences. Rejoining a medical scheme later can involve waiting periods and, where applicable, late-joiner penalties, depending on the individual's circumstances and the relevant rules.

Healthcare costs cannot be considered in isolation

Reducing medical aid contributions may free up money in the monthly budget, but the decision could affect other areas of a financial plan.

An unexpected medical expense can deplete emergency savings, disrupt debt repayments or force a household to reduce retirement contributions. Similarly, cancelling insurance without assessing the consequences could leave a family financially vulnerable if a serious illness or disability occurs.

A financial adviser can help assess healthcare costs alongside income, savings, debt, insurance and longer-term financial objectives. This broader view can help households understand the risks of reducing cover and identify alternatives that better balance affordability with protection.

Research by Momentum on financial advice has found that households working with a professional financial adviser have investments that are 9.5 times larger than those without an adviser. While this association does not mean that advice guarantees better financial outcomes, it highlights the potential value of taking a comprehensive approach to managing money.

As medical aid contributions rise, the challenge is not simply to find the cheapest option, but to determine what level of cover is appropriate and sustainable.

For households facing difficult budget decisions, reviewing medical aid and other forms of financial protection with a qualified adviser can help ensure that short-term savings do not come at the expense of long-term financial security.

The aim is to find a balance between what a household can afford today and the protection it may need tomorrow.

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