Brace for 10% increase in medical aid contributions
Medical scheme members and their employers should brace for a 10% increase in their contributions in 2020, outpacing the annual general inflation rate by 4.6%, according to Aon SA, which advises employers on employer-provided medical benefit costs.
This means your salary increase is likely to be lower than the increase in your contributions as it is more likely to be based on inflation, or lower if your employer is struggling.
This means your contributions will take a bigger chunk of your salary in 2020.
Aon’s prediction is in line with the findings so far by another company that advises employers, Alexander Forbes Healthcare.
It has found that so far nine open schemes have announced their contribution increases and the average is 9.5%.
Momentum Health medical scheme has announced a weighted average annual contribution increase of 8.2% for 2020, and Bonitas has announced a weighted average increase of 9.9%. (A weighted increase is an average based on the number of members paying the different percentage increases on each option.)
Remember that averages can be misleading because your own contribution increase will depend on the option you are on and how many dependants you have.
To date, Medihelp has announced the highest weighted average increase of 11.9%.
Earlier in October, SA’s largest open medical scheme, Discovery Health, announced a weighted average annual increase of 9.5% for 2020.
“Though the industry increases this year may appear steep during a tough economic climate that continues to put a strain on consumers’ pockets, various factors need to be considered, such as rising medical inflation rates, ageing scheme profiles and regulatory requirements,” Momentum Health executive head of sales and marketing Damian McHugh said.
Over the past few years, the average age of beneficiaries covered on medical schemes in SA has increased, resulting in increased claims costs, which in turn impacts on the contribution increases required to manage these components, according to a media release by Momentum Health.
While Momentum Health’s weighted average increase is relatively low at 8.2%, the range of increases announced is 7.9%-9.9%. –