How to make corporate medical aid affordable

How to make corporate medical aid affordable
How to make corporate medical aid affordable. Image source: Unsplash

With each passing year, the cost of living seems to increase exponentially, and even the basics like food, petrol and clothing are now becoming difficult to afford. South Africans especially are cutting corners wherever they can – and this may even extend to things like their medical aid. Just last month, South African medical schemes announced their annual member contribution increases for 2024, which ranged from around 7 to 10% – which will place even more strain on consumers’ already stretched budgets.

The Council for Medical Schemes (CMS) reports that as of 2022, only 14.95% of South Africans – around 8.9 million people – were covered by medical schemes. And, according to the 2022/23 Alexander Forbes’ Medical Aid Insights publication, the proportion of older members on medical schemes has increased over the last 10 years, while the number of young members has decreased. It’s clear that many South Africans don’t prioritise medical aid – and this is particularly true for young people who may not have any immediate health issues that prompt them to seek medical cover.

If you’re a South African company wanting to attract top talent to your organisation, offering medical aid as part of your benefits package can therefore help you stand out from other companies vying for the same pool of top talent. But this can be expensive to do, especially if you’re growing as a company with regular new hires. So, how can you still offer medical aid to your employees while keeping it as affordable as possible?


  1. Offer a hospital plan with a cheaper primary care insurance product

While you may think of a hospital plan as a ‘bare minimum’ medical aid option, it still offers comprehensive hospital and chronic cover – because remember that by law, all South African medical aids must fund all Prescribed Minimum Benefit (PMB) conditions. If you want to offer a more comprehensive option, an affordable way to do so is to add on a cheaper primary care insurance product (such as Sanlam Primary Care) for day-to-day benefits. This combination is a growing trend with corporates, because it’s more affordable than comprehensive medical aid, but still ends up offering a similar level of benefits and cover.


  1. Provide a cheaper hospital plan to younger employees

Many medical aid schemes are now creating specific medical aid options that are more affordable and suitable for young people, many of whom are just starting out in their careers. If you employ graduates or younger employees, you could look at offering them a plan that caters specifically for the young and healthy. One example of this is Fedhealth’s new FlexiFEDSavvy, which offers a basic hospital plan for the under 35s that starts at only R945 per month (R965 per month in 2024). If you have a relatively young workforce, this can be a way to offer medical cover as a perk, while keeping costs affordable.


  1. Monthly medical aid subsidy

A third option is to go the more traditional route, where your company pays a percentage of the contribution to your employee’s medical aid plan – and they can choose from two or more open schemes – and they pay in the rest. There’s no set percentage that you need to contribute; it’s usually determined by factors such as your cashflow and how many employees you have.

Whether it’s a full or a part subsidy, in most cases the employer will take a cost-to-company approach, meaning the contribution amount is already incorporated into the employee’s gross salary. This means that the employer pays the medical scheme directly, which gives employees a tax benefit as they’re not paying for it with their after-tax income.


Showing your employees that you value them

In South Africa, it’s not compulsory for employers to provide medical aid, so offering this as a benefit is a definite way to distinguish yourself from your competitors. Besides saving your employees rands and cents, offering them some kind of medical aid benefit demonstrates that you prioritise their health and wellness – which can help boost morale and loyalty, create more motivated employees and a more harmonious working environment. Also, if employees are looking after their health proactively thanks to adequate medical cover, this can mean lower absenteeism levels – which will help to further boost your company’s productivity.