Category: Medical finance

ADDISIONELE MEDIESE KORTING VIR ’N INDIVIDU: WANNEER KAN EK MEDIESE UITGAWES UIT DIE SAK BETAAL AS ’N EIS INDIEN?

Addisioneel tot die Artikel 6A mediese belastingkrediet is daar ook krediet beskikbaar vir individue (belastingpligtiges) wat mediese uitgawes self uit die sak uit betaal in terme van Artikel 6B van die Inkomstebelastingwet.

Die addisionele mediese uitgawes belastingkrediet kan deur die belastingpligtige geëis word vir  kwalifiserende mediese uitgawes aangengaan vir homself asook sy afhanklikes.

Volgens Artikel 6B(1) sluit “afhanklike” die volgende in:

  • Gade of lewensmaat van die belastingpligtige;
  • Belastingpligtige se kind, asook kind van gade;
  • Enige ander lid van die belastingpligtige se familie waarvoor die belastingpligtige aanspreeklik is vir die ondersteuning of familieversorging; en
  • Enige ander persoon waar die mediese skema se reëls ’n afhanklike erken.

Kwalifiserende mediese uitgawes sluit in:

  • Dokters, tandartse, fisioterapeute, oogkundiges en verkseie ander mediese praktisyn;
  • Geregistreede hospitale, of tuisverpleging deur ’n gekwalifiseerde verpleegkundige;
  • Voorgekrewe medisyne (“Oor-die-toonbank-medisyne” kwalifseer slegs indien dit deur ’n geregistreerde mediese praktisyn voorgeskryf is.);
  • Bogenoemde uitgawes aangegaan in die buiteland; en
  • Uitgawes soos voorgeskryf deur die Kommissaris noodsaaklikerwys aangegaan en betaal met betrekking tot liggaamlike gestremdheid of ongeskiktheid.

Vir die uitgawes om te kwalifiseer vir die addissionele mediese uitgawes belastingkrediet moes dit werkilk deur die belastingpligtige in die jaar van aanslag betaal word en nie verhaalbaar gewees het deur ’n mediese fonds of ’n gapingsdekkingplan nie.

Die addisionele mediese uitgawes belastingkrediet word op spesifieke formules bereken soos uiteengesit in Artikel 6B. Belastingpligtiges 65 jaar en ouer, asook belastingpligtiges met ’n gestremdeheid, of gade, of kind met gestremdheid kan die meeste voordeel uit Artikel 6B benut.

As u enige individu-verwante vrae het, staan ons vriendelike en bekwame span gereed om u te help. Moenie huiwer om ons te kontak nie.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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So what is Gap cover all about

A2Something that is a frequent question by consumers is “Why did my medical aid not cover the full cost of my hospitalization?” Thinking they were covered for 100% of all the hospitalization costs. Medical aid can be a minefield for the regular Jane out there, who is just looking for the peace of mind that her medical aid will cover her adequately in all circumstances. All Jane wants to know is, as long as she pays her medical aid contributions, she will be covered in the event of a catastrophe, such as a car accident, as well as all her normal day-to-day expenses at a healthcare provider. She definitely does not want to become bankrupt over additional costs she becomes aware of only once she has been discharged from hospital, costs which she can ill afford, and which are likely to put her back in hospital due to the financial stress she is now placed under.

In South Africa, medical schemes have different options from which you can choose, and these options vary in the benefits offered, and of course also the cost of the contributions.  When choosing a medical aid option, you will see that professional services (such as the surgeons or anesthetists) in hospital will be reimbursed at either 100%, 200% or 300% of the scheme rate.  Anyone will be forgiven for assuming that being covered at 100% means exactly that – you are fully covered!  However, specialists in South Africa are not currently regulated as to what they can charge patients for their services, and could charge in excess of the 100% rate which medical schemes are willing to pay, sometimes as much as 500% of the scheme rate.  The end result is that the patient ends up with a shortfall on the specialist’s account, which has to be paid out of his pocket.

To give an example of how significant these costs could be, have a look at this example of the cost of different procedures:

Procedure Cost Medical Aid Payout Shortfall Gap Claim
Appendectomy R3 441.46 R1 388.20 R2 053.26 R2 053.26
Caesarean Section R12 605.86 R4 192.10 R8 413.76 R8 413.76
Coronary Bypass R40 751.80 R13 587.60 R27 164.20 R27 164.20
Hysterectomy R12 977.80 R4 751.00 R8 226.80 R8 226.80
Tonsillectomy R12 297.70 R4 119.91 R8 177.79 R8 177.79
Wisdom Teeth Removal R6 260.00 R1 958.50 R4 301.50 R4 301.50

From the above, you see that one can easily have a gap in cover between what is actually charged and what the medical aid is willing to pay for the specialist for the procedure. This is an expense you did not perhaps consider when joining the medical aid, as you mistakenly believed you were fully covered for hospital expenses.

So how does gap cover work?

Gap cover does not form part of your medical scheme membership. In fact, it is not even regulated by the same laws. Medical schemes are regulated by the Council for Medical Schemes, and the Medical Schemes Act, while gap cover falls under the Short-term Insurance Act.

Although there is an on-going debate between government and the different stakeholders as to whether gap cover products are in fact doing the business of a medical scheme, this matter has not yet been resolved, and for now, gap cover products are still available to the public. The value of having gap cover cannot be stressed enough, even for members of medical scheme options that pay at 300% of the scheme rate.  Claims experience by the gap cover providers show that specialists often charge above 300% of scheme rates. Although government has published draft regulations to prohibit the marketing of these products, because of the on-going debate, these products are still being marketed and their value is clearly self-evident

While your medical aid will reimburse the hospital or specialist directly when you are hospitalized, because of the regulatory issues, gap cover providers will refund you, the member, directly.  It is then your responsibility to reimburse the service provider. The process of claiming is also separate from your medical scheme.  Usually, a gap cover claim must be submitted after your medical scheme has paid the service provider.  Having a gap policy is also not dependant on a specific medical scheme.  You can change medical schemes, but still keep the same Gap cover.

Often downgrading your medical aid option from one that pays a higher scheme rate to one that pays a lower rate and getting gap cover to ensure full payment of specialists is a consideration for consumers, but that may not always be wise as there may be other benefits that you are forgoing on. You should only downgrade your medical scheme option after obtaining advice from your financial advisor, who is accredited to give advice on your specific circumstances.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Just a spoonful of sugar to help the medicine go down!

Spoonful_BAs from the 2013 tax year contributions to medical aid schemes are no longer allowed as a deduction.

This provision was replaced by the section 6A Medical scheme fees tax credit.  Instead of allowing contributions as a deduction from taxable income, the credit is deducted from taxpayer’s liability for normal tax.  The credit is in the nature of a rebate, rather than a deduction.

For the year of assessment ending 28 February 2014 the amount of the credit is equal to:

  • R242 per month in respect of benefits to the taxpayer
  • R242 per month in respect of benefits to the first dependant
  • R162 per month in respect of every additional dependant

For a family of four the total rebate will be R808 per month.  It is a requirement that the contributions are actually paid and not only payable.  Contributions paid by an employer and taxed as a fringe benefit will be regarded as having been paid by the employee.

For the current year of assessment the deduction of medical expenses in addition to scheme contributions, is dealt with in terms of section 18 of the Act.  With effect from 1 March 2014 this provision is repealed and replaced with the section 6B Additional expenses medical tax credit.  The definition of “qualifying medical expenditure” for purposes of calculating this rebate is identical to the wording of the deleted section 18 and includes amounts paid to registered medical professionals, nursing homes and hospitals, and for prescribed medicines.  Once again it is a requirement that the expenses were actually paid.

Amounts recoverable from the medical scheme are not taken into account.  Expenditure necessarily incurred and paid in consequence of any physical impairment or disability suffered by the taxpayer or any dependant, is also taken into account as qualifying expenditure.  The definition of “disability” remains unchanged.

If the taxpayer or one of his dependants is a person with a disability as defined, or aged 65 years or older, the rebate is calculated as follows: 33.3% of the amount by which the actual medical scheme contributions exceed three times the section 6A medical scheme fees tax credit, as well as 33.3% of the qualifying medical expenses paid by the person.

Example 1

A family of four includes a person with a disability.  The taxpayer’s contributions to the medical scheme for the year of assessment is R48 000.  He also paid qualifying medical expenses of R12 000 and expenditure in consequence of the disability amounted to R24 000.

Section 6A rebate x 3 = R29 088
(R48 000 –R29 088) x 33.3% = R6 298

(R12 000 + R24 000) x 33.3% = R11 988

In addition to his section 6A rebate of R9 696, the taxpayer is allowed a section 6B rebate of R18 286 (R6 298 in respect of contributions and R11 988 in respect of qualifying expenses).

The basis for calculating the rebate in all other cases is completely different and best illustrated by way of an example.

Example 2

The taxpayer has a wife and two children.  He paid medical fund contributions of R48 000 and qualifying medical expenses of R24 000 during the year of assessment.  His taxable income for the year is R240 000.

In calculating the rebate, all qualifying expenditure is taken into account.  The actual contributions to the medical scheme are reduced by an amount equal to four times the section 6A rebate.

Qualifying expenditure:                      R24 000
Contributions:                                     R48 000 – (R9 696 x 4) = R9 216

The rebate is limited to 25% of so much of the aggregate of the two amounts calculated above as exceeds 7.5% of the person’s taxable income.

Rebate = [(R24 000 + R9 216) – (R240 000 x 7.5%)] x 25%
[R33 216 – R18 000] x 25%
R3 804

Thus, in addition to his section 6A rebate of R9 696 the taxpayer is entitled to a section 6B rebate of R3 804.

As the second rebate is calculated with reference to the person’s taxable income, lower income taxpayers benefit more.  Had the person’s taxable income in the above example been R442 880 or higher, he would not have received any rebate at all.

Whether the new system is simpler or more efficient is debatable.  The uniform rebate in respect of contributions will presumably ease SARS’s administrative burden.  From the taxpayer’s perspective however, the requirements regarding record-keeping and proof of expenditure remain the same.  For high income earners it may however not be worth the effort, as they will most likely not qualify for the second rebate.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

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