Tax credit no health solution

2017-08-31 06:00

Removing tax credits for medical schemes will make them unaffordable to 22% of current scheme holders, affecting poorer members most.

This is according to research by economics consultancy Econex, which looked at the impact of removing tax credits to medical schemes and then reallocating them to funding National Health Insurance (NHI), as suggested by the 2017 White Paper.

The tax credits are paid to principal members of medical schemes to “reimburse” them for making use of private healthcare.

During 2014/15 the amount of tax credits paid to these principal members was about R18.5bn.

During 2015/16 the total annual tax rebate paid to a principal member without dependents came to R3 240.

A rebate of R12 966 was paid to a principal member with as many as four dependants.

Econex focused specifically on how the removal of the medical scheme tax credits would make medical scheme membership unaffordable, if the affordability threshold is 12.85% of income.

“Removal of medical scheme tax credits will therefore affect poorer beneficiaries.”

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