Good news for medical aid members in South Africa
South Africans who rely on medical aid are likely to receive a welcome boost in the upcoming national Budget, with tax experts expecting medical aid tax credits to stay in place and increase roughly in line with inflation.
According to PwC’s Budget Predictions 2026 report, there is little indication that the government plans to scrap the credits any time soon, despite ongoing debate over funding the National Health Insurance (NHI).
The firm explained that the idea of reducing support for medical aid members is not new.
“In Budget 2018, it was announced that increases in medical tax credits would be kept below inflation for the next three years to fund the rollout of the NHI,” it said.
Additionally, Budget 2025 did not provide for an increase in medical tax credits in 2025/26 as part of the measures to raise additional tax revenues.
However, proposals went further in 2025 when the Department of Health suggested removing the credits entirely for higher-income earners to help finance the new healthcare system.
PwC said this is unlikely to happen soon. “The Minister of Finance has come out against such a proposal, and we do not expect that there will be any move to remove medical tax credits in the medium term,” it said.
“It is expected that Budget 2026 will see medical tax credits being increased in line with inflation.”
This is welcome news after the Standing Committee on Appropriations heard a funding proposal that included phasing out the tax rebate over 15 years.
Deputy Director-General of Health Nicholas Crisp indicated that discussions were taking place with the National Treasury to redirect the savings into the NHI fund.
Despite this, Finance Minister Enoch Godongwana publicly pushed back and stressed the economic risks of removing the relief.
“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,” he said.
Need for medical aids is not going anywhere
Godongwana warned that eliminating the credits would punish households already under financial strain and could weaken the country’s tax base.
“We are doing some work internally and between the government departments to look at particular options, but no decisions have been made as yet,” the Treasury added.
Healthcare experts have highlighted that this uncertainty shows how far South Africa still is from fully implementing the NHI.
Legal challenges, administrative complexity and massive funding requirements continue to delay the scheme’s progress.
Tiago de Carvalho, CEO of Ambledown Financial Services, previously said consumers should not assume the NHI will replace private healthcare anytime soon. He urged South Africant to keep their cover in place.
Estimates suggest the NHI could cost between R300 billion and R460 billion annually, while the country already faces debt levels above 75% of GDP, weak growth and a shrinking tax base.
“Even the most modest phase of implementation requires financial discipline and growth— neither of which currently characterises the South African economy.”
“If the first step is unfunded, the rest of the plan becomes meaningless,” de Carvalho said.
Because of these constraints, he believes South Africa will ultimately operate a hybrid system rather than a single national insurer.
“It is unlikely that the NHI will replace private healthcare,” he said, adding that medical schemes and gap cover will remain essential protection against high medical costs.
Loading ...