Good news for medical aid members in South Africa, for now
South Africans who rely on medical aids received welcome news this week after Finance Minister Enoch Godongwana confirmed that no decision has been made to scrap medical tax credits—at least for now.
Speaking ahead of his Medium-Term Budget Policy Statement (MTBPS), Godongwana made it clear that he had issued no directive or announcement regarding the removal of medical aid tax credits to fund the government’s proposed National Health Insurance (NHI) scheme.
His comments follow growing concern among industry stakeholders and taxpayers that the Treasury may be preparing to eliminate the credits.
The clarification follows weeks of speculation sparked by remarks from Deputy Director-General of Health Nicholas Crisp, who suggested that the Department of Health was in discussions with the Treasury to phase out the medical tax rebate.
According to Crisp, the funds saved from scrapping the credit would be redirected towards financing the NHI.
While the phasing out of medical tax credits has long been part of the NHI’s conceptual funding framework, the lack of clear timelines or official confirmation had created uncertainty.
The Board of Healthcare Funders (BHF), representing medical aid schemes across the country, wrote to Treasury Director-General Duncan Pieterse in October requesting details about the discussions, but said it had not yet received a response.
The BHF expressed alarm at a recent Department of Health presentation to Parliament outlining a plan to completely eliminate medical aid tax credits for all income groups by 2029.
The move would come even before the NHI system becomes fully operational. The NHI Bill was signed into law by President Cyril Ramaphosa in 2024.
However, significant implementation and funding challenges remain. The BHF warned that removing the credits could have serious consequences.
Its commissioned research found that taking away medical tax credits for lower-income members could render private medical aid unaffordable for between 430,000 and 690,000 members.
Many would be forced to downgrade their coverage, remove dependents, or abandon medical schemes entirely, shifting more pressure onto the already overburdened public healthcare system.
No plan to scrap medical aid credits
In response to these concerns, Godongwana assured South Africans that no such decision has been made.
He emphasised that the people currently benefiting from medical tax credits form the core of the country’s personal income tax base—largely middle-class earners who already shoulder a significant portion of the tax burden.
Eliminating the credits, he warned, would effectively penalise this group at a time when households are already under severe financial pressure.
“The people who are currently receiving medical tax credits are the bulk of those contributing to personal income tax. Removing the tax credit will effectively be an attack on the middle class,” Godongwana said.
He added that while Treasury is in discussions with the Department of Health about possible funding options for the NHI, there is no alternative mechanism in place yet.
“We are doing some work internally and between the government departments to look at particular options, but no decisions have been made as yet,” a Treasury official confirmed.
The reassurance comes against a backdrop of mounting financial stress for South African households.
A consumer survey conducted in August 2025 by InfoQuest and Decapod Customer Experience revealed that 41% of households have already cut back on medical aid, insurance, and savings to make ends meet.
The survey painted a stark picture of how ordinary South Africans are adjusting to economic strain.
Nine in ten consumers said they are actively looking for bargains, while 85% are spending less on luxuries, and 83% are socialising and eating out less frequently.
More than two-thirds have reduced or cancelled streaming subscriptions, and 65% are buying local rather than imported products to save money.
The cost-cutting extends to lifestyle choices as well: 62% have switched to cheaper grocery stores, 56% have abandoned hobbies, and 51% are carpooling or relying on public transport.
Nearly half of respondents said they have cancelled gym memberships, while four in ten have moved into smaller homes to cut costs.
Financial pressure has also forced some households into more drastic measures. Over a third have paused education plans, 29% have sold or pawned possessions, and 27% have borrowed money from family or friends to get by.
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