The Medical Aid Fund Crisis – What You Must Know

The Problem Is Bigger Than Your Ever-Increasing Premiums.

Here’s what’s actually happening. Medical aid funds are struggling to maintain the regulatory reserve requirement of 25% solvency.

To compensate, they push through above-inflation premium increases year after year. The growing number of young people leaving medical aid is creating a negative feedback loop that threatens the sustainability of private medical aids.

Think about what that means for you personally. Medical aid funds are pushing above-inflation premium increases because they are losing healthier members. This leads more of these members to leave, exacerbating the problem.

In other words, the very system you’re counting on — especially as you approach or enter retirement — is under structural strain.

Why Young People Leaving Is Your Problem Too.

You might wonder why younger members walking away affects your plan.

The answer lies in how medical aid works. Medical schemes operate on a risk-pooling system, where younger and generally healthier members help subsidise the healthcare costs of older, sicker members.

Furthermore, people who are aged 65 make up 10% of members, but account for 30% of the costs incurred by the medical aid schemes, whereas people aged between 20 and 44 account for 33% of members, but only spend 24% of the cost.

So as you age, your claims cost more — and if the pool of younger contributors keeps shrinking, the financial pressure lands squarely on members like you.

Consider this: 52% of people who have a medical aid scheme are earning between R200,000 and R500,000 per annum. If your premiums are continuing to grow at 10% per year, and your salary is growing at inflation, which is around 3% to 4%, it becomes increasingly unaffordable to sustain a medical aid scheme.

Now picture yourself on a fixed retirement income. How long before your medical aid premium simply becomes unaffordable?

A Warning You Cannot Afford to Ignore.

Luyanda Njilo, senior equity research analyst for healthcare at Nedbank Corporate and Investment Banking, warned that if the problem isn’t addressed within the next five to 10 years, medical aid schemes face collapse.

Consequently, if you’re planning to retire in the next decade, your healthcare strategy cannot simply assume that your current medical aid will still exist — or remain affordable — in its current form.

So What Can You Actually Do?

The solution starts with awareness, and then it demands a plan. Blindly continuing your current medical aid contribution and hoping for the best is not a retirement healthcare strategy.

A proactive approach means understanding your options: medical savings accounts, hospital plans, gap cover, out-of-pocket healthcare reserves, and alternative funding structures for retirement-age healthcare needs. It also means knowing when to review your plan, how to structure your contributions, and what to do if your scheme’s sustainability deteriorates further.