South Africans shirk medical insurance

June 29, 2011

The figures are staggering. About 84% of South Africans have no medical aid, which suggests that most families are using already overburdened public health-care facilities. A National Health Insurance Scheme is still being considered but, in the meantime, the vast majority of citizens are struggling.

Lower- and middle-income earners either do not belong to a medical aid or have reduced their cover. But even some cover is better than none — a hospital plan, for example, for serious medical emergencies.

Yusuf Dukander, project director of financial services at The South African Institute of Chartered Accountants (SAICA), says that proposed new tax credits should bring medical cover within the reach of low- to middle-tier earners and these earners should make every effort to take out cover.

How does the new medical scheme contribution credit work?
The new contribution credit proposals will make medical aid cover more reasonable for lower income earners. If the proposal goes through from 1 March 2012, monthly contributions to medical schemes and qualifying medical schemes will be converted into contribution credits and no longer treated as deductions — a medical scheme contribution credit will now be available to taxpayers who belong to a medical scheme, set at a fixed amount per month for the taxpayer and first dependant, and two-thirds of this amount for additional dependants.

Let’s look at a person earning a taxable income under the R150 000 annual threshold with a spouse and one dependant.

Before this amendment, they were entitled to a deduction of R338 per month in total. With the introduction of the contribution credit they are now entitled to an amount of R576 per month — an increase of R238 per month.

Dukander suggests that employers inform their staff about medical aid cover and the new contribution credit, so they can make informed choices, as some cover is better than none at all.

He also has the following tips for those who are thinking of joining a medical aid scheme.

Look at your lifestyle
Some schemes have benefit options with considerably reduced costs if you lead a healthy lifestyle. So if you exercise regularly, eat 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. Iif you suffer from any of the 25 conditions on the Chronic Diseases List — such as epilepsy or cardiac failure — then it’s imperative you take out sufficient cover to meet these costs. A comprehensive option would be a better idea, if you can afford it.

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