Scheme increases below salary increases on average, but it may still be a heavy dose

Laura du Preez | 12 November 2021

Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses. 


Medical schemes have announced increases for next year averaging about 4.58% according to Alexander Forbes, while salaries are expected to increase by around 5.5%.

These averages may, however, not reflect your reality and for many South Africans, healthcare cover is a major cost with unmanageable annual increases.

Despite low averages, some scheme members will face increases as high as 7.6%. In addition, gap cover – insurance for costs not covered by medical schemes - will increase by anything from 4.9% to 9%.

Alexander Forbes Healthcare’s calculation of average contribution increases announced to date, is based on low average annual increases for schemes that will only implement their increases later in 2022, instead of in January.

Some of the country’s largest medical schemes, Discovery Health Medical Scheme, Fedhealth Medical Scheme and Momentum Health Medical Scheme have postponed their annual increases until May 1, April 1 and September 1 next year respectively.

Momentum Health will implement increases of between 5.2% and 6.4% in September. This makes the scheme’s annual average increase a mere 2%, but the members will have to find the additional contribution money in September and increase for 2023 will be off this higher base.

Before the pandemic hit last year, schemes were running down their reserves or using investment income to pay claims. The pandemic reversed this, Jacqui Nel, business unit head of healthcare for Aon South Africa, says.

In both 2020 and this year members put off elective procedures and failed to do regular preventative healthcare checks – screenings such as pap smears and mammograms and even check-ups with GPs or dentists.

As a result, reserves have gone up 8 to 10% and claims ratios are down by the same amount as many people stayed away from doctors and medical facilities during the Covid peaks and the lockdowns, Nel says.

This enabled schemes to make surpluses and build their reserves over the past 19 months. Schemes are not-for-profit entities and must either hold surpluses in reserve or return them to members. Schemes have chosen to return the money to members by way of lower increases or increases implemented later in the year.

In future there may be some pent-up demand for delayed procedures and higher claims for more advanced cancers and other illnesses that should have been detected earlier in screening tests had members done these.

This could impact the claims schemes face in future and ultimately your contributions at a later stage.

Delaying increases now allows schemes to return some of the reserves to you and avoid steep increases for 2023. On the other hand, schemes that implement low average increases for next year may need to hike contributions more steeply at the start of 2023, Jill Larkan, head of healthcare consulting at GTC, says.

Salaries set to increase by 5.5%

Employers expect to give salary increases for next year averaging at 5.5% - a real increase of around 1% given an expected inflation increase of 4.2 to 4.5%.

Willis Towers Watson, a global advisory and broking company, polled 320 South African employers on the salary increases they plan to implement for next year, director of talent and reward, Melanie Trollip, says.

Increases range from as much as 7.1% for those working in the medical technology sector to 3.7% for those in business consulting, the survey found.

Although fewer than last year, some employers will, however, not grant any increases. Trollip says businesses expecting to freeze pay altogether are set to fall from 12% this year to 5% in 2022.