The new medical contribution credits, which are now effective for the 2013 tax year will probably make medical aid cover reasonably affordable for lower income earners - observes Yusuf Dukander, project director South African Institute of Chartered Accountants (SAICA).

Medical aid tax credits could potentially bring medical cover within reach of low to mid-tier earners

Johannesburg, Monday 19 August 2013 – The new medical contribution credits, which are now effective for the 2013 tax year will probably make medical aid cover reasonably affordable for lower income earners - observes Yusuf Dukander, project director of financial services at the South African Institute of Chartered Accountants (SAICA).

Dukander adds that taxpayers who belong to a medical scheme would now qualify for contribution credits whereas previously taxpayers were entitled to a deduction.  The contribution credits are set at a fixed monthly amount for the taxpayer and first dependant, and two-thirds of this amount for additional dependants.
He explains that this is a positive route in the healthcare industry until such time that the National Health Insurance (NHI) is fully operational; citing that Health Minister Dr Aaron Motsoaledi was quoted in his Health Budget speech on 15 May 2013, as saying that “the White Paper on NHI will be released soon”.
“The medical aid tax credits come at a crucial time in the lives of many South Africans; considering the fact that approximately 84% of South Africans are still living without medical aid cover.”  Of South Africa’s estimated 51,8million citizens, only 3,7 million are principal members and further 4,8 million dependents of one or other medical scheme.
“With the current tough economic times, many low- and middle-income earners might believe that financial limitations give them no choice but to risk their family’s health by either not having medical aid or reducing their cover.  However, families should factor in the medical contribution credit when making this important decision due to the increased benefit.  We encourage people who do not have medical aid to look at their finances and at the medical contribution credit to see if they can afford cover, says Dukander.”
He added that even those familiar with medical aids should consider the health cover they purchase as carefully as they do their home, car and personal belongings’ insurance.  “For instance, should one opt for day-to-day cover, they should always choose an option whereby the rate they can claim from their scheme is in excess of the base rate (in instances where they must pay out of pocket).
Dukander acknowledges that choosing the most appropriate medical aid cover can appear difficult as people’s needs, as well as schemes, differ.  He recommends that people should perform a self-risk profile by responding to these key questions.
How old are you?
Age is a critical factor as healthcare complications tend to increase with age. The older you become, the more expensive it becomes to join schemes for the first time. It makes financial and health sense to join early.
How is your health?
Some schemes have benefit options with considerably reduced costs if you lead a healthy lifestyle.  So if you exercise regularly, consume nutritious foods, have no chronic diseases and your family has no history of serious health problems, then a hospital plan with adequate benefits may be fine.  However, if you suffer from any of the 25 conditions on the Chronic Diseases List – such as epilepsy, asthma or cardiac failure – then it’s imperative that you take out sufficient cover to meet these costs. A comprehensive option would be a better idea in this instance.
How many people will be covered?
Will the cover just be for you, or do you also need to cover your family and dependants? This factor should address you and your dependants’ profiles and medical needs, and an overall benefit option should then be taken.
How much do you earn and what can you afford?
How much can one set aside for medical aid cover? Low-income earners should consider network choices. This provides them with medical care at specific hospitals or doctors – generally close to where they live. However, these are designed to include standard benefits, which may be limited. Loyalty programmes alone should never be a deciding factor when choosing a medical aid scheme. That’s because they have no correlation to the benefits from the scheme.
What’s in the fine print?
As a member of a scheme one must be certain of the benefits in a particular option. It is important to establish what exactly the medical aid would pay and the contribution from the medical savings. Also, one has to be able to draw comparisons to ensure that they are adequately covered. It is also important to read the scheme correspondence, particularly annual scheme letters addressing changes in contributions, and new or revised benefits.  Being well-informed ensures that the member has protection and cover.
All medical schemes are, by law, required to cover a basket of benefits – known as Prescribed Minimum Benefits (PMB), which must be covered at cost. The PMB list includes the provision of the diagnosis, treatment and care costs of specific chronic diseases, as well as any emergency medical condition.
Schemes base their rates on their own scheme tariffs – in other words, rates vary from scheme to scheme or from one option to the next.  However, some doctors and other healthcare providers are increasingly charging above the scheme base rate. So, where does this leave the consumer? People should always ask the doctor what their rates are to avoid any surprises.