South Africa is considering major health service restructuring to move towards a universal system. This calls for understanding the challenges in the existing health system. The paper, therefore, comprehensively evaluates an aspect of current health system performance - the benefit incidence of health services. It seeks to understand how the benefits from using health services in South Africa are currently distributed across socio-economic groups. Using a nationally representative household survey, results show that lower socio-economic groups benefit less than their richer counterparts from both public and private sector health services, and that the distribution of service benefits is not in line with their need for care.