25 Apr

Medical Aid & Tax Rebates

medical aid

One of the NHI funding proposals is reducing medical aid tax rebates to medical aid members

By Gerhard van Emmenis, Principal Officer, Bonitas Medical Fund

Tax rebates have slowly been eroded over the years and there was the talk of further reductions in medical aid tax relief. However, after the budget speech in February this year, the tax credits are unchanged.

Before 2012, SARS deducted your medical aid contributions against your taxable income. However, in 2012 SARS introduced a medical ‘tax credit’ which is deducted from your overall tax liability.

The medical tax credit consists of the following two amounts:

  • The medical scheme fees tax credit
  • This applies to the monthly premiums you pay to a registered medical scheme on behalf of yourself and your dependents.
  • The main member, as well as the first dependant on the medical scheme, will receive a monthly tax credit of R310 (for the 2018-2019 year)
  • All additional dependants will receive a monthly tax credit of R209 (for the 2018-2019 tax year)

There are three categories:

  1. Under 65 (without disability)
    • 25% of the total contributions paid to the medical scheme
    • Less (4x medical scheme fees credit)
    • Plus (qualifying medical expenses paid less 7.5% of taxable income)
  2. Under 65 (with a disability)
    • 33.3% of total contributions paid to the medical scheme
    • Less (3x medical scheme fees credit)
  3. 65 or over (with or without disability)
    • 33.3% of total contributions paid to the medical scheme
    • Less (3x medical scheme fees credit
    • Plus (qualifying medical expenses)

It is important to note that if your premium is a deduction from your salary or wages, your employer is obliged to use the credit system to adjust your monthly PAYE tax accordingly. If you contribute to a medical scheme independently from your employer, you will receive the tax credit on assessment when you complete your tax return.

  • The additional medical expenses tax credit

The amount of your tax rebate is made up of a percentage of all out-of-pocket expenses you have spent on qualifying medical expenses that weren’t covered by your medical scheme. You will need to keep the slips for these expenses. To calculate this, special formulas are used which are dependent on your age and whether you or any of your dependents have a disability.

Qualifying Out-of-Pocket Expenses:

  • Consultations, services or medications from a registered medical practitioner, orthopaedist, physiotherapist, dentist, chiropractor, herbalist, homeopath, optometrist, osteopath or naturopath
  • Admission to a registered hospital, including nursing homes
  • Care at a patient’s home by a registered nurse, nursing assistant, nursing agency or midwife
  • Medicines prescribed by a duly registered physician (as listed above) and acquired from a duly registered pharmacist
  • Medical expenses on services rendered or medicines supplied outside of South Africa and which are substantially similar to the services and medicines listed above
  • Money paid towards the treatment of a physical impairment or disability (as long as it is a qualifying expense prescribed by the Commissioner)

What About Over-the-Counter Expenses?

If they are prescribed by a registered medical practitioner and purchased at a pharmacist they qualify for a tax rebate.

Private healthcare is a necessity in South Africa, especially when the public healthcare system is overburdened. While it may be a grudge purchase, at this stage, private medical aid scheme members do enjoy a tax relief for their premiums and expenses.


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