Government

Warning over the end of medical aid tax credits in South Africa

Staff Writer

 ·23 Feb 2026

As many as 690,000 medical aid members are at risk of being pushed out of their cover if the government keeps medical aid tax credits flat for another year—or worse, makes good on threats to cut the relief entirely.

The Board of Healthcare Funders (BHF) has appealed to the National Treasury and Finance Minister Enoch Godongwana to move against the plan to cut these tax credits and instead increase their value.

At the very least, the minister should provide clear policy certainty that medical scheme tax credits will be retained, the group said.

In recent briefings to Parliament, the Department of Health indicated that medical scheme tax credits may be phased out and ultimately scrapped, to help fund the National Health Insurance (NHI).

This is not a question of “if” but “when”, given that the removal of medical aid tax credits is explicitly written into the NHI Act as one of the NHI Fund’s funding sources.

The department believes that R33 billion can be directed to the NHI by cutting the tax credit, which it says serves the “well off” at the expense of the poor.

According to the BHF, there is a complete misconception that those who are on medical aids are wealthy and that the tax credit is an undue government subsidy.

The data shows that of the almost 9 million South Africans covered by medical aids, more than two-thirds (67%) are low- and middle-income earners, it said.

“These credits are not a luxury but a critical financial support,” the BHF said.

“Eliminating them prematurely would increase household healthcare costs and risk pushing an estimated 430,000 to 690,000 members out of cover due to unaffordability.”

Removal of the credit would also force many other members to downgrade their cover, remove dependants or exit the system entirely.

This would place an extra burden on an already overstretched public healthcare sector, adding to the government’s healthcare woes.

Given President Cyril Ramaphosa’s commitment not to promulgate the NHI Act until certain constitutional legal challenges have been resolved, removing or changing the tax credit at this stage could prove disastrous.

Raise the tax credit instead

Moving in the complete opposite direction, the BHF said that National Treasury should instead consider raising the tax credit, at least in line with inflation.

Medical aid tax credits have been frozen at R364 per month since 2023, which has also helped the Treasury save money.

The BHF said this, in turn, has saddled working households with additional financial pressures, forcing them to carry the burden.

“If the government is serious about attaining universal health coverage, it cannot allow the stealth reduction in these credits to continue,” it said.

Beyond the immediate impact on household budgets, the BHF warned that the long-term consequences for the health system must also be considered.

“If not immediately addressed, the continued erosion of the credit’s real value increases affordability risks and may lead to downgrades in cover, the removal of dependants, or complete exit from schemes.”

“Such an outcome would not advance universal health coverage. Instead, it could destabilise medical scheme risk pools, reduce cross-subsidisation, and increase pressure on an already overstretched public health system, all while the NHI remains years away from full implementation.”

The group said that it would be fiscally and socially counterproductive to dismantle existing funding mechanisms long before a fully operational alternative is in place

“At a minimum, medical tax credits should be adjusted annually in line with inflation to preserve their real value and protect affordability.”

Ahead of the 2026 Budget this week, the BHF said it is looking for a commitment from Godongwana that the tax credit will continue, with “transparent guidance” on how any future health financing reforms linked to the NHI will be sequenced to protect affordability and system stability.