How should you budget for healthcare and long term care in retirement?
An employer subsidy can end at retirement, tax credits may move to another payer and cheaper cover may leave more bills to fund.
Budget for those changes, uncovered treatment and assistance with everyday living separately.
Replace the employer contribution explicitly
Ask your employer whether the subsidy continues after retirement, on what terms, for which dependants and for how long. Get the answer in writing. A benefit available to an earlier generation of retirees may not apply to your employment contract.
A R6,500 scheme contribution with a R2,500 employer subsidy costs the household R4,000. Ending the subsidy adds R30,000 annually before tax changes or increases.
Use claims and bank records to separate routine medicines, consultations, dental and hearing costs, spectacles and transport from one-off procedures or equipment.
Calculate medical credits without treating them as cash benefits
For 2026/27 the basic medical scheme fees tax credit is R376 a month for the taxpayer and R376 for the first dependant, with R254 for each further dependant. It reduces income tax and is non-refundable. SARS publishes the amounts and conditions.
A couple paying qualifying contributions could have R752 a month of basic credit. If their scheme bill is R6,500 and other healthcare spending is R1,000, the R7,500 total becomes R6,748 after that credit, assuming enough income tax is payable to use it. Keep the R7,500 cash payment in the calendar until the credit is reflected in PAYE or assessment.
At age 65 or older, the additional credit broadly equals 33.3% of qualifying contributions above three times the basic credit, plus 33.3% of qualifying medical expenses. It is non-refundable. SARS explains the calculation. Check who pays and which expenses qualify; general household help and care accommodation do not automatically qualify.
Check membership penalties before changing cover
Changing schemes alone does not trigger a late-joiner penalty. At age 35 or older, insufficient recognised previous cover can allow a penalty under Regulation 13, with maximum bands of 5%–75% of the relevant contribution. The Council for Medical Schemes explains the bands.
A 25% penalty on a R4,000 applicable risk contribution adds R1,000 monthly. Obtain prior membership certificates and the receiving scheme’s calculation; check waiting periods and start dates before cancelling cover.
Use real increases to anchor the inflation test
Published 2026 increases illustrate the variation: Discovery’s schedule shows 0% for Active Smart and 6.9% or 7.9% for other listed options from April, with a 7.2% weighted average. Bonitas’s comparison includes 6.9% for BonFit and 10.5% for BonComprehensive. These are scheme examples, not a market forecast.
Test several rates against your own budget. A starting healthcare allowance of R7,500 a month would become approximately the following after ten years of constant increases:
| Assumed annual increase | Monthly cost in ten years | Increase from today |
|---|---|---|
| 5% | R12,217 | 63% |
| 8% | R16,192 | 116% |
| 10% | R19,453 | 159% |
The scenarios hold healthcare needs constant. New care needs add to the cost. Compare the figures with expected pension increases and decide where a widening shortfall would be funded.
Separate treatment cover from daily care
The Council for Medical Schemes’ Prescribed Minimum Benefits guidance explains the minimum cover and the role of treatment rules and designated providers. A covered diagnosis does not establish that supervision at home, care accommodation or every associated expense is funded.
Obtain care quotes for your town, the person’s condition and required level of assistance. Check hours, overnight cover, assessments, exclusions and increases. Assumed support of R22,000 a month plus R45,000 of equipment and alterations needs R573,000 over two years before inflation; replace those figures with suitable quotes.
Deduct costs the care arrangement replaces, such as included meals, but retain those of a partner living at home.
Decide who pays each bill
- Confirm scheme benefits and whether you must pay first and claim back.
- Budget uncovered costs from ordinary household income.
- Use identified, accessible capital for any remaining gap.
- Agree family support explicitly if needed; do not budget an unconfirmed promise.
Identify the point at which the budget stops working
Compare ordinary healthcare spending, a loss of subsidy and a period of paid care against dependable income and accessible capital. A named payer and a specific funding gap are more useful than assuming the family or scheme will cover every expense.
Get the care and cover decisions from the right people
A treating clinician should establish the care needed; a scheme or appropriately accredited healthcare adviser should confirm benefits and option suitability. This article budgets the cost rather than selecting treatment or a scheme. For an unresolved benefit dispute, use the scheme’s internal process and then the Council for Medical Schemes’ complaints route. Ask a tax practitioner to confirm credits where care expenses or the payer’s circumstances are uncertain.
Your next step
Obtain written scheme terms and local care quotations and test the budget after lost subsidies and higher costs; if the numbers still work, proceed with professionally assessed cover; if not, adjust while you still can.