Council for Medical Schemes raised concerns about reducing the contribution.
Members of the Government Employees Medical Scheme (GEMS) will continue paying contributions based on a 9.5% average increase after the Council for Medical Schemes (CMS) kept the previously approved adjustment in place, despite the scheme’s bid to reduce it to 7.5%.
Dr Stan Moloabi, Principal Officer of GEMS, said the proposal to reduce the contribution adjustment was to support its members during a period of continued financial pressure
The medical scheme noted that the proposal reflected the its ongoing efforts to enhance affordability while maintaining comprehensive healthcare benefits and safeguarding its long-term sustainability.
GEMS notes the rejection
“The proposal to reduce the contribution adjustment was informed by the scheme’s commitment to easing the financial burden on members wherever possible,” said Moloabi on Tuesday.
“We recognise the cost-of-living pressures many of our members continue to face, and affordability remains a key consideration in every decision we make. While the outcome is a decline of the proposal submitted by GEMS, we have to respect the assessment of the regulator and address the concerns raised.
“GEMS respects the regulatory process and appreciates the engagements we have had with the CMS throughout the review process.
9.5% contribution increase for GEMS members
Following the rejection of the proposal, the scheme will maintain the previously approved weighted average contribution adjustment of 9.5%, which has been effective since 1 February 2026.
“The scheme is currently finalising the necessary implementation arrangements to ensure members are informed and supported throughout the process,” said GEMS.
“Schemes seeking to moderate contribution increases are generally those that have already attained and maintained solvency levels in excess of the prescribed minimum,” reads a letter to GEMS from CMS registrar Musa Gumede, as reported by Business Day.
“In this instance (GEMS) solvency remains below the statutory threshold, and the proposed reduction is therefore not considered prudent.”
Medical Schemes Act
The Medical Schemes Act requires schemes to maintain a solvency ratio of at least 25%. A scheme’s ratio, which is the ratio of its cumulated funds to its annualised contribution income, is considered a key measure of its financial stability.
GEMS’ plan to cut its contribution increase to 7.5% in July, which would result in a net deficit for the year and see its solvency ratio drop to 21%, said Gumede. The scheme had not demonstrated a credible path for restoring solvency.
“The recovery to 25% occurs only by 2030, or earlier only if higher future contribution increases of between 9.2% and 9.8% are achieved or substantial savings of R2.7 billion are achieved,” he added in the letter.
Concerns raised for reducing contribution
Gumede first raised concerns about reducing contributions in June. But now he has rejected the proposal, citing the scheme’s plan to cut costs to offset the drop in contribution income as risky, as they are not guaranteed to deliver the required savings.
“The registrar is not satisfied that the savings are sufficiently certain, realised or enforceable to support the reduced contribution level.”
He further noted that GEMS’ actuary had stated it was unable to support the proposed reduction to 7.5%.
“The scheme has not demonstrated that the proposed contributions are actuarially adequate, as required in our letter of June 11.”