Healthcare Advocates Warn Against Abolishing Medical Aid Tax Credits Ahead of 2026 Budget

The Board of Healthcare Funders warns that 690,000 members could lose medical aid cover if South Africa cuts tax credits to fund National Health Insurance.

By: AXL Media

Published: Feb 23, 2026, 8:55 AM EST

Source: Information for this report was sourced from BusinessTech

The Strategic Threat to Medical Scheme Tax Credits

The Board of Healthcare Funders is currently challenging a government proposal that could lead to the phased elimination of medical scheme tax credits. The Department of Health has identified these credits as a potential source of funding for the National Health Insurance, estimating that roughly 33 billion rand could be redirected to the new fund. However, industry leaders argue that these credits are essential financial supports rather than subsidies for the wealthy. The potential removal of this relief is explicitly written into the NHI Act, leading to significant concern regarding the timing and impact of such a fiscal shift on the broader health ecosystem.

Impact on Low and Middle Income Earners

Contrary to the perception that medical aid members are exclusively high income earners, data from the Board of Healthcare Funders suggests that 67 percent of the 9 million South Africans with private cover fall into low and middle income categories. For these households, the monthly tax credit is a vital component of affordability. The removal of this credit would likely force between 430,000 and 690,000 members to exit their schemes entirely due to rising costs. Such a mass exit would result in a significant downgrade of national health security as former private patients shift their reliance toward an already overextended public sector.

Transformative Analysis: The Risk of Systemic Destabilization

The continued erosion of the real value of tax credits represents a stealth reduction in household support that could destabilize the entire medical scheme risk pool. Since 2023, these credits have remained frozen at 364 rand per month, which has effectively shifted more of the financial burden onto working families as inflation rises. If these credits are abolished before a fully operational alternative like the NHI is in place, the resulting loss of cross-subsidization within private schemes could lead to a collapse of affordable coverage options. Analysts suggest that dismantling existing funding mechanisms prematurely would be counterproductive to the goal of achieving universal health coverage.