Discovery Health Medical Scheme (DHMS) ended 2025 in a stronger financial position than a year earlier, but its latest integrated report also shows that South Africa’s largest open medical scheme is still facing pressure on its beneficiary base and risk-pool profile.
The scheme grew principal membership in 2025 after a decline in 2024. Principal members increased by 9 008, from 1 359 379 at the end of 2024 to 1 368 387 at the end of 2025. This contrasts with 2024, when principal membership fell by 14 485 from the previous year.
However, total beneficiaries continued to decline, although at a much slower rate than in 2024. DHMS had 2 725 122 beneficiaries at the end of 2025, down from 2 735 204 in 2024 – a reduction of 10 082 lives, or 0.37%. In 2024, beneficiaries declined by 53 038 lives, or 1.9%, from 2023.
The figures suggest DHMS reversed the decline in principal members, but not the decline in total covered lives. This points to continued pressure on the average number of dependants per membership.
The scheme’s membership profile continued to age. The average age increased to 38.15 years, from 37.56 years in 2024, while the pensioner ratio rose to 13.65%, from 13%.
This matters because an older risk pool generally results in higher healthcare utilisation and claims. DHMS notes that healthcare inflation remains structurally above consumer inflation, driven by utilisation, demographics, tariffs, technology, and the disease burden.
Plan movement remained limited. Between December 2025 and January 2026, 95.86% of members did not change plans, while 2.47% upgraded and 1.67% downgraded.
DHMS remained the largest open medical scheme in South Africa, with 57.7% of the open scheme market, compared with 58% in 2024.
Financial position strengthened
Although the membership trends were mixed, DHMS’s financial position improved materially.
Insurance revenue increased to R86.7 billion, from R80.7bn in 2024. Gross annual contributions were R101.5bn, and investment income increased to R2.985bn, from R2.828bn.
The scheme reported a net surplus before mutualisation of R7.174bn, compared with R2.896bn in 2024. Its liability to members for future benefits increased to R38.8bn, from R31.6bn.
Importantly, the improvement was not solely investment-driven. DHMS moved from a negative insurance service result of R350m in 2024 to a positive insurance service result of R565m in 2025, before amounts attributable to future members. Investment income and strong market performance nevertheless made a material contribution to the overall result.
The scheme’s financial assets at fair value increased to R41.6bn, from R36.6bn, and the report records a gross investment return of 20.04% for 2025.
Solvency improved to 32.58%, from 31.01%, placing DHMS comfortably above the statutory minimum of 25%. The scheme was R7.7bn above the minimum solvency requirement and retained its AAA credit rating for the 26th consecutive year.
A higher solvency ratio is not automatically better for members if reserves are allowed to grow without regard to affordability. In DHMS’s case, however, the stronger solvency position was used to provide direct contribution relief. The scheme deferred its 2026 contribution increases from January to 1 April 2026, saving members about R1.5bn, or roughly R1 100 per average membership.
Claims increased, but the claims ratio improved
DHMS paid about R75bn in claims during the year. Net claims incurred rose to R74.9bn, from R70.5bn in 2024, while the gross claims ratio improved to 88.34%, from 90.24%.
The scheme processed 55.8 million claims in 2025. Average net claims incurred were R4 617.76 per member per month, compared with R4 345.29 in 2024.
The scheme said 31% of members had chronic conditions, highlighting the pressure that non-communicable diseases place on claims. It paid an average of R4 770 per beneficiary with a chronic condition for out-of-hospital costs, R74 613 per hospital admission, and R160 289 per beneficiary undergoing oncology treatment.
The claims data supports the scheme’s value argument: 15.6% of beneficiaries claimed more than their contributions during the period.
Contribution increases were cushioned
DHMS’s weighted average contribution increase for 2026 was 7.2%, but the increase was deferred to April. The scheme said 65% of members received an increase of 6.9%, Active Smart members received a 0% increase, and the balance received an increase of 7.9%.
DHMS says that, using its weighted comparison methodology, its 2026 average contributions were 17.7% lower than the average of the next seven largest open schemes. This widened from 12.7% in 2025.
Gross contribution income rose
Gross contribution income (GCI) increased by 7.27% to R101.5bn, from R94.6bn in 2024. The increase reflects both contribution increases and shifts in the scheme’s membership and plan mix.
DHMS said the most significant net membership growth contributing to the increase in GCI was recorded in mid- to low-tier options, where the Smart series grew by 38 264 net members, compared with 21 085 in 2024. By contrast, the KeyCare series experienced the largest reduction, with a net principal membership decline of 18 481, although this was lower than the decline of 22 001 recorded in 2024.
This continues the trend reported last year, when Discovery Health told Moonstone that KeyCare losses were the main reason for DHMS’s overall membership decline, while the Smart series grew strongly. The 2025 figures suggest the Smart series remained an important growth lever, while KeyCare continued to lose ground.
Administration and managed care costs
Administration fees increased to R7.3bn, while managed care costs rose to R2.7bn. Managed care costs increased by 12.24%, partly reflecting the expansion of programmes such as Personal Health Pathways.
Managed care costs represented 2.66% of gross contribution income. DHMS also says its administration expenditure remained among the lower levels in the open-scheme market, and that its annual value assessment found Discovery Health delivered R2.10 in value for every R1 paid in administration and managed care fees.
The administration and managed care figures are important because they indicate whether member contributions are being absorbed by non-healthcare costs or translated into claims funding, care management and operational support.
ATB claims error affected more than 16 000 members
The improved financial position was tempered by an operational issue involving the Above Threshold Benefit (ATB).
DHMS disclosed that a claims-system error resulted in R148m in overpaid ATB claims. The error affected 16 658 members, representing 10.5% of members on the affected Executive, Comprehensive, and Priority plans.
The error related to the way certain tiered medicine claims accumulated towards the ATB. These claims were incorrectly accumulated at 100% of the Discovery Health rate, rather than at the applicable tiered rates. This caused some members to reach the self-payment gap earlier than they should have and to access risk-funded ATB benefits prematurely.
The system defect originated in January 2025 and was confirmed in December 2025. DHMS says the system fix was implemented on 19 December 2025, and claims were reprocessed between December 2025 and April 2026.
At year-end, DHMS recognised R126m in member claims receivables related to the ATB error. The total overpaid benefit was later determined to be R148m.
The trustees initially resolved to recover the overpaid amounts from affected members to protect the scheme’s pooled funds. However, Discovery Health subsequently offered to reimburse DHMS in full. The trustees accepted the offer, members who had already repaid amounts were refunded, and the scheme says no member was financially disadvantaged.
The matter was reported to the Council for Medical Schemes, affected members and stakeholders were informed, and DHMS says the system defect was remediated. Further independent review work on the claims system is planned.
The report also discloses smaller claims-processing errors involving intra-muscular injection claims and dental claims, which were corrected.
Managed care and benefit value
DHMS continued to position Personal Health Pathways and the Personal Health Fund as key tools to improve prevention, screening, and member engagement.
Members used more than R269m from their Personal Health Fund for healthcare services such as pharmacy, GP, pathology, dentistry, and optometry claims. The scheme also recorded 348 812 virtual consultations during 2025.
These initiatives support DHMS’s argument that value is not only measured by claims paid, but also by interventions intended to prevent disease progression, improve screening, and reduce unnecessary hospitalisation.
