Municipal workers across the country have been given the green light to dump South Africa’s eighth-largest open medical aid scheme after its near collapse due to its poor financial state.

The SA Local Government Bargaining Council (SALGBC) will now allow unionised municipal workers to change their membership in the Sizwe Hosmed Medical Scheme after experiencing difficulties accessing healthcare services following its placement under provisional curatorship in September.

Members reported to the Independent Municipal and Allied Trade Union (Imatu) that medical practitioners have increasingly required them to pay cash upfront for medical services, as Sizwe Hosmed stopped honouring claims while continuing to collect monthly contributions from municipalities and members.

This led to several Sizwe Hosmed members working in local government attempting to terminate their membership.

Still, the SALGBC’s main collective agreement states that the change can only happen from January 1 next year.

Imatu then successfully lodged an urgent exemption application with the SALGBC to allow for an early exit from the medical scheme from December 1.

The troubled medical aid scheme was not accredited by the SALGBC for 2026 due to failure to meet the requirements.

In addition, after it was placed under provisional curatorship, it announced its intention to raise its subscription fees by a staggering 19% next year without consulting the bargaining council as required by the conditions of its accreditation.

The effect of the exemption is that Sizwe Hosmed members will be allowed to change to any of the SALGBC-accredited medical aid schemes – Bonitas, KeyHealth, LA Health, and SAMWUMED – for the 2026 benefit year.

However, for municipal workers making the change, it should have been done by no later than last Friday, October 31.

Those who missed the October 31 deadline may still terminate their membership in terms of the normal annual window period by giving notice before the end of this month, and their termination will take effect on January 1, 2026.

Imatu Deputy General Secretary: Legal Craig Adams said the granting of the exemption represented a significant and positive outcome for its members affected by the collapse of Sizwe Hosmed.

“It ensures that members will not remain trapped in a non-functioning scheme and can secure reliable medical cover through one of the accredited alternatives in the local government sector,” he added.

In September, the Gauteng High Court, Pretoria, placed Sizwe Hosmed under provisional curatorship and appointed Lebogang Mpakati as the provisional curator.

Mpakati insisted that Sizwe Hosmed has not collapsed but is going through challenges, which necessitated the curatorship.

According to the Council for Medical Schemes (CMS), Sizwe Hosmed has been experiencing financial difficulties as its solvency level has declined to a level far below the statutory requirement of 25%.

In November 2021, when Sizwe Medical Fund and Hosmed Medical Scheme merged to establish Sizwe Hosmed, their combined solvency level was recorded at 36.5%.

A year later, the solvency had declined to 25.45%, just above the statutory required level, and below 25% early in 2023, forcing the CMS to demand that it submit a detailed business plan.

Sizwe Hosmed was placed under statutory management in July last year in order to protect members’ funds and ensure that it complied with the law, became financially sound, and was properly administered.

The statutory manager’s August 2025 report declared that Sizwe Hosmed was facing severe financial and operational distress, marked by critical solvency issues, regulatory non-compliance, member losses, and unsustainable claims.

Its reported solvency levels for June and July this year were only 5.6% and 6.62%, respectively.

The CMS then succeeded in approaching the High Court to place the scheme under provisional curatorship, citing its poor financial state.

CMS registrar Dr Musa Gumede argued in court that provisional curatorship was in the interest of beneficiaries and that it was desirable due to material irregularities, as Sizwe Hosmed was not in sound financial condition.

Sizwe Hosmed had about 58,269 members at the end of December 2023 and 138,507 beneficiaries.

Meanwhile, earlier this week, the CMS announced that it is conducting a forensic investigation into Bonitas Medical Scheme after an enquiry and a comprehensive review of the information submitted by the country’s second-largest medical aid scheme.

“The findings suggest that the allegations warrant further investigation. Consequently, the registrar has resolved to initiate a forensic investigation to examine the full scope of the claims and to formulate appropriate recommendations,” the council explained.

The CMS also assured the public that the investigative process will proceed objectively and transparently, and that its decision to initiate the probe does not imply any predetermined outcome.

The investigation follows reports over a year ago that Bonitas terminated its Boncap option administration contract with AfroCentric Distribution Services, which is majority-owned by Sanlam.

loyiso.sidimba@inl.co.za

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