Double blow for medical scheme members Contribution hikes high, tax relief low
Grant recipients will receive an additional R100 this year, but the increase will to be phased in over the year, with the first R90 being added on April 1 and R10 in October.
Medical scheme members facing above-inflation increases in contributions for many years are now also facing below-inflation increases in the tax deduction allowed for contributions to a medical scheme.
Malusi Gigaba proposes whittling down the amount you claim as a tax deduction by increasing the rand amounts you can claim by less than half the inflation rate.
From March 1, you will be able to deduct from the tax you owe a medical tax credit of R310 a month for yourself and the first dependant you register on the scheme – up by just R7 or 2.31% from the amount you can claim for this tax year.
If you have more dependants registered on the scheme, you will be able to deduct R209 a month for each of them – up just R5 or 2.45% from the amount you could claim in this tax year that ends at the end of this month.
Medical scheme contributions increase on average by two to three percentage points more than the inflation rate, which means that unless your income increases by more than inflation, each year you will pay a greater proportion of your income in contributions.
The healthcare division of GTC recently reported that increases on nine large medical schemes averaged 7.75% this year. Year-to-date inflation is at 4.4%. The deductions for medical scheme contributions and qualifying medical expenses not recovered from a medical scheme have been under threat of being removed for some time now. from poor families. This will apply to all first-year students at universities and technical and vocational education training colleges in 2018, who will receive full funding for their studies in their first year.
The programme will be rolled out in subsequent years until all years of study are covered. The criteria for receiving this funding is that the students’ families must earn less than R350000 a year. Also, university students who are part of the National Student Financial Aid Scheme will have their loans for 2018 onwards converted to a bursary.
Deputy Minister of Finance Sifiso Buthelezi said it was not easy to find funding for this expense – R57-billion – but it was the duty of government to invest in future generations.