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Plans to eliminate medical aid credits for employees enrolled in registered medical aid schemes could cost the average South African household up to R14,640 per year, while an individual could lose up to R4,368 per year in tax credits.<\/p>\n
The National Department of Health (NDOH) says that medical aid tax credits will end in South Africa \u2013 and the money used to reimburse members every year will instead be fed into the National Health Insurance (NHI) Fund.<\/p>\n
Presenting to the National Council of Province\u2019s Standing Committee on Health and Social Services on Tuesday (31 October), the department responded to many concerns raised by stakeholders around the NHI Bill, which the National Assembly adopted in June.<\/p>\n
One of the biggest worries for the NHI \u2013 funding \u2013 continues to be unaddressed, with the department not providing an estimate for how much its lofty ideals of universal healthcare will cost the country. However, the department has been clear that taxpayers will absolutely be footing the bill \u2013 and that\u00a0medical aid tax credits will be over.<\/strong><\/p>\n \u201cMedical tax credits only benefit those that are in a position to pay either through medical scheme coverage or out-of-pocket but do not befit the poor. The money that goes into tax credits will be consolidated to benefit all as the role of medical schemes and out-of-pocket payment reduces under NHI<\/strong>,\u201d the department said.<\/p>\n Big blow to cash-strapped South Africans<\/strong><\/p>\n South African Reward Association member Kirk Kruger said South Africans are among the most indebted people in the world, with as much as 73% of disposable household income servicing debt repayments.<\/p>\n \u201cWe find ourselves in an environment of rising interest rates, high levels of unemployment, and escalating food and energy prices,\u201d Kruger said.<\/p>\n He added that middle-class South Africans with a bond of R1.5 million, a car loan of R300,000, and a personal loan of R50,000 are now paying approximately R5,438 more per month on loan repayments compared to November 2021.<\/p>\n This means this person will need to earn R8,915 more per month at a gross level to have the extra R5,438 after tax. That is more than a R106,000 per year.<\/p>\n Now, if the National Department of Health (NDOH) manages to eliminate existing medical aid credits, households in South Africa will be losing out on even more income.<\/p>\n This is according to\u00a0Tax Consulting SA, which illustrated the impact this would have on the average employee.<\/p>\n For employees who belong to a registered medical aid, according to the Medical Schemes Act, the medical credits actually reduce an employee\u2019s monthly PAYE amount, which is currently implemented on most payrolls thereby increasing an employee\u2019s net take-home pay, the firm said.<\/p>\n Following the Budget Speech held in February 2023, it was declared that the following monthly medical aid credits are applicable for the 2024 year of assessment i.e., 1 March 2023 \u2013 29 February 2024:<\/p>\n \u201cIf these credits are eliminated, it would translate to a significant reduction in disposable income for households,\u201d it said.<\/p>\n To illustrate this impact on South Africans, the firm explained that, for a family of four, the loss would amount to R1,220 per month or R14,640 per annum.<\/strong><\/p>\n A family of two would experience a monthly decrease of R728, equating to R8,736 annually. Individual net take-home pay would decrease by R364 per month or R4,368 per year.<\/p>\n The firm added that lower-income earners who can only afford basic medical aid or hospital plans will feel the pinch the hardest.<\/p>\n \u201cThis is because, in cases where the credits may have reduced an employee\u2019s tax liability to an insignificant amount where earnings were just above the tax threshold, the employee may now need to reconsider membership to fund a higher monthly PAYE amount, which will equate to less disposable income.<\/p>\n \u201cWith steep annual increases for medical aid being implemented at the beginning of each fiscal year, this could also cripple medical aid industries where members will consider either downgrading plans further or even cancelling membership due to financial constraints,\u201d it said.<\/p>\n","protected":false},"excerpt":{"rendered":" Plans to eliminate medical aid credits for employees enrolled in registered medical aid schemes could cost the average South African household up to R14,640 per…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1502","post","type-post","status-publish","format-standard","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1502","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=1502"}],"version-history":[{"count":1,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1502\/revisions"}],"predecessor-version":[{"id":1504,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1502\/revisions\/1504"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=1502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=1502"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=1502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n\n\n\n
\n \nMedical credit<\/th>\n Monthly credit<\/th>\n<\/tr>\n<\/thead>\n \n Principal member<\/td>\n R364<\/td>\n<\/tr>\n \n First dependent<\/td>\n R364<\/td>\n<\/tr>\n \n Each additional dependent<\/td>\n R246<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/figure>\n