The Council for Medical Schemes (CMS) has raised major concerns over a new financial proposal by the Government Employees Medical Scheme (GEMS). The regulator warns that the revised GEMS 2026 contribution increase might threaten the long-term financial stability of South Africa’s largest medical scheme.
Public sector unions have consistently pressured GEMS to protect members from rising costs. In response, GEMS adjusted its planned average rate hike. The scheme originally set a 9.8% increase for January 2026. It lowered this to 9.5% in April. GEMS then agreed to slash the figure to 7.5% from July, pending regulatory approval.
CMS Registrar Musa Gumede has formally requested detailed justification from GEMS Principal Officer Stan Moloabi. The scheme has 14 days to submit further evidence.
Financial Risks Of The Lower GEMS 2026 Contribution Increase
Actuarial reports reveal that the lower rate will create an annual funding gap of approximately R1.5 billion. GEMS aims to offset this shortfall via benefit adjustments and managed care interventions.
However, the CMS remains highly sceptical. Gumede noted that the success of these cost-saving measures is highly uncertain. The regulator stressed that the new GEMS 2026 contribution increase seems at odds with statutory financial obligations.
Operating deficits could severely hurt the scheme’s solvency ratio. By the end of 2025, GEMS’ solvency ratio stood at 24.7%. This sits just below the statutory minimum of 25%. Internal projections indicate the ratio could plummet to between 21% and 22% without an immediate recovery strategy.
Regulator Demands A Strict Sustainability Plan For GEMS 2026 Contribution Increase
The CMS has ordered GEMS to present a revised financial sustainability plan. This document must show a clear path back to compliance with Regulation 29 of the Medical Schemes Act.
Furthermore, Gumede requested comprehensive data on the cost-containment measures supporting the 7.5% model. The regulator requires sensitivity analyses to show the impact if expected savings fail to materialise. GEMS must also clarify how it will manage its loss-making Onyx and Emerald options.
Scheme Managers Defend Financial Health
Moloabi confirmed that GEMS is compiling the requested data. He stated that recent managed care changes have already generated real savings. For instance, the Tanzanite option now limits private hospital cover to Prescribed Minimum Benefits. GEMS is also reviewing its approved medicines list and clinical pre-authorisation paths.
Moloabi insisted that GEMS remains highly resilient and capable of paying member claims. He noted that solvency ratios do not give the full picture. He highlighted that ratings agency GCR recently affirmed GEMS with an AA+ rating and a stable outlook.
Public Sector Unions Sound Affordability Alarm
Labour representatives warn that healthcare costs remain dangerously high. Cosatu chief negotiator Itumeleng Molathlegi pointed out that a 7.5% hike still outpaces the 4% public sector wage increase for 2026.
Molathlegi cautioned that if the CMS rejects this compromise, many public servants may find medical cover entirely unaffordable. He urged GEMS to look at corporate cuts, such as reducing marketing budgets and board meetings, rather than trimming member benefits.
Moloabi dismissed the marketing concerns, stating that they represent a tiny 0.123% of net contributions. He added that non-healthcare spending sits at 5.56%, which remains well below the wider industry average.
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