In a move not seen since the Covid-19 pandemic, Discovery Health Medical Scheme (DHMS) will return some of its unexpectedly high reserves to members and defer its 2026 contribution increase for three months.
DHMS is SA’s biggest open medical scheme, with more than 2.7-million beneficiaries. Thanks in part to better-than-anticipated returns on its investments, it expects to end the year with a solvency ratio of 31.5%, significantly higher than the statutory requirement of 25%.
A medical scheme’s solvency ratio is a measure of its claims-paying ability and is the ratio of accumulated funds to annual gross contribution income. Open schemes are available to anyone who can afford the monthly premiums.
DHMS will return R1.5bn to members by delaying next year’s hike to April 1, when contributions will increase by a weighted average of 7.2%. That is lower than the 9.3% weighted average contribution increase implemented in January 2025.
“We know that members really appreciated the deferral of increases during Covid-19, and given that the scheme has excess solvency, the decision was made to use some of [it] to defer the increase to the first of April 2026,” said Deon Kotze, chief commercial officer for DHMS’s administrator, Discovery Health.
Medical schemes usually implement annual contribution increases that come into effect on January 1. During the Covid-19 pandemic many schemes, including DHMS, built up a cash pile due to lower-than-anticipated claims, as members delayed elective procedures and avoided visiting healthcare facilities to reduce their risk of infection. SA’s first case of Covid-19 was identified in March 2020.
DHMS used its strong solvency position to defer contribution increases in 2021, 2022, and 2023.
This time around, however, the increase in DHMS’s solvency ratio is due to the better-than-expected performance of its investments, said Kotze.
He emphasised that DHMS’s 2026 contribution increases, benefit changes and the launch of new plans aimed at young families were subject to approval by the industry regulator, the council for medical schemes (CMS).
The CMS has issued guidance to the industry, advising schemes to cap their contribution increases at 3.3% plus “reasonable utilisation estimates”. Medical schemes are not bound by the guidance, and the CMS usually approves higher contribution increases.
DHMS’s 7.2% contribution increase comprises an anticipated increase in medical inflation broadly in line with consumer price inflation — which the SA reserve bank estimates will be 4.2% for 2026 — and a 3%-4% increase in utilisation prices, Kotze said. Increased utilisation is driven by new medical technology and the increasing needs of an older, sicker population, he said.
Most large medical schemes have yet to announce their planned contribution increases for 2026. Bonitas announced last week that it would hike premiums by a weighted average of 8.8%, while Medshield said on Monday that its contributions would rise by a weighted average of 7.5%. Bestmed said on Tuesday that its contributions would increase in 2026 by a weighted average of 6.8%.
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