Medihelp’s solvency ratio declined by another two percentage points over the past financial year, but the scheme says it remains on course to restore its reserves and return to compliance with statutory requirements.
By the end of 2024, the scheme’s solvency ratio was 20.99% – below the 25% minimum level required by regulation 29(2) of the Medical Schemes Act. This follows a 10-percentage point drop in 2023, when the solvency level fell from 33.93% (restated) at the end of 2022 to 23.84% because of “continued high claims experienced by the scheme”.
To address the shortfall, Medihelp submitted a three-year financial recovery plan to the Council for Medical Schemes (CMS) ahead of its 2024 product launch. The CMS approved the plan, which sets out targeted contribution increases to rebuild the scheme’s reserves.
Medihelp, the oldest open medical scheme in South Africa and one of the “big five”, has been navigating financial pressures since its decision in 2021 to shield members from contribution increases during the Covid-19 pandemic. At the time, it opted to draw on accumulated reserves and implemented a 0.45% reduction in average premiums for 2022.
“It was a time of profound uncertainty – when countless individuals lost their jobs, and salaries were slashed, forcing families into financial hardship,” said board chairperson Chris Klopper. “In the face of this adversity, Medihelp chose to stand by its members, easing their burden by not increasing membership fees when they needed support the most.”
According to Medihelp, this move effectively reinvested R800 million back into members’ pockets.
Principal officer Varsha Vala said actuarial modelling showed that if the scheme had implemented industry-average contribution increases, its solvency ratio could have reached 35.4% by 2025.
Although the current level remains below the statutory threshold, Vala described it as “a temporary and actively managed deviation, supported by a focused financial recovery plan”.
The scheme has since adjusted course. In 2023, it implemented a 7.5% increase in contributions, followed by a 15.96% hike in 2024.
At the time, Medihelp said membership growth had placed additional pressure on reserves, necessitating the steep increase.
Medihelp’s latest annual report highlights some improvements. The relevant healthcare expenditure ratio dropped to 94% – a 6.8% year-on-year improvement – helping to ease pressure on reserves.
Average healthcare expenditure per beneficiary rose just 6%, despite medical inflation.
The scheme also reported a reduction of more than 15% in preventable hospital readmissions, contributing to lower healthcare spending.
Other key figures from the year ended 31 December 2024 include:
- Insurance revenue per beneficiary per month: R2 280 (up from R2 003 in 2023).
- Insurance service expense per beneficiary per month: R2 302 (up from R2 163).
- Relevant healthcare expenditure per beneficiary per month: R2 145 (up from R2 022).
- Investment income: R168.2 million (down from R174.4m).
- Total assets: R2.39 billion (up from R2.18bn).
- Total comprehensive income: R1.67 million (down from R22.5m).
Medihelp currently covers 202 404 beneficiaries across 95 540 main members, with an average beneficiary age of 38. The total number of main members in 2023 was 101 633 with 216 786 beneficiaries covered.
The scheme holds a Global Credit Rating of A+.
Its most popular benefit options for new members in 2024 were MedVital Elect (2 595 new members) and MedAdd Elect (1 842 new members).
During the financial year, the scheme paid R3.3bn in claims and supplied nearly 3.9 million medicine items. The average cost per member for acute medicine was R249.67, and for over-the-counter medicine, R120.91.
Financial sustainability
In 2024, the scheme recorded an increase in younger members.
Vala said Medihelp’s focus on putting members first, offering targeted benefits, and embracing digital transformation has helped to attract a younger membership profile.
Vala attributed this shift to a strong year-on-year insurance service result of R362.8m.
“Furthermore, we focused on cost management, while achieving better-than-expected investment performance,” Vala said. “These results confirm that we are on track to strengthening the scheme’s financial stability and restoring its reserves and solvency ratio.”
Klopper said one of the board’s key priorities in 2024 was to oversee the effective roll-out of the scheme’s financial recovery measures, with the goal of restoring reserves to the statutory 25% by the end of 2026.
“In line with the scheme’s strategic objectives, Medihelp announced a weighted average contribution increase of 15.97% across all plans in 2024.
“Consequently, we anticipated a slight decline in overall membership enrolments. However, it is encouraging that the average enrolment age of the scheme’s main membership is younger in 2024, at 39 years, than the average of 41 in 2023.”
Klopper added that Medihelp’s strategy to attract and serve a younger member base supports its long-term sustainability.
“The focus now shifts to member retention strategies that propel innovation, spotlight creative initiatives, enhance engagement, and ensure long-term competitiveness.”
