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Updated 01 March 2013

Your medical scheme and the budget

Here's how the latest budget will affect your medical scheme costs.

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The Minister of Finance, Pravin Gordhan, today presented his budget speech to parliament. The budget clearly paves the way for measuring not only where funds are allocated, but more importantly how funds will be spent. This newsletter focusses primarily on the impact the budget speech will have on Private Medical Schemes.

Addressing NHI in the ministers speach

Addressing the issue of NHI the minister quoted from the State of the Nation Address where President Zuma mentioned that the National Development Plan provides a perfect vehicle for united action.

In the light of this and the infancy of NHI in the first pilot stage it is not unexpected that the minister announced that the initial phase of NHI will place no additional revenue demands on the fiscus.

However, the minister did indicate that over the longer term additional funding will be required. The minister indicated that the National Treasury is working with the Department of Health to examine funding arrangements and system reforms.  To this regard the minister indicated that a discussion paper inviting public comment will be published later this year.

The minister announced the following tax rebates for members of medical schemes:

  • Taxpayers 65 and older may claim all qualifying expenditure.
  • Taxpayers under 65, where the taxpayer or the taxpayer’s spouse or child is a person with a disability may in determining tax payable deduct monthly contributions to medical schemes (a tax rebate to be known as a medical scheme fees tax credit) up to R242 for each of the taxpayer and the first dependant on the medical scheme and R162 for each additional dependant.
  • When determining taxable income they can also claim a deduction for medical scheme contributions exceeding four times the amount of the medical schemes fees tax credits and claim all qualifying medical expenses (which excludes medical scheme contributions).
  • Other taxpayers under 65 may in determining tax payable deduct monthly contributions to medical schemes (a tax rebate to be known as a medical scheme fees tax credit) up to R242 for each of the taxpayer and the first dependant on the medical scheme and R162 for each additional dependant.
  • When determining taxable income they can also claim a deduction for the aggregate of medical scheme contributions exceeding four times the amount of the medical schemes fees tax credits and any other medical expenses, limited to the amount which exceeds 7,5% of taxable income (excluding retirement fund lump sums).
  • The General Health budget of R133,6 bn increased with 4,5% the lowest increase of all major expenditure spending areas.
  • District health services R 48,8 bn, increased 6,5%
  • Provincial hospital services R 26,4 bn, increased 4,6%
  • Central hospital services R 18,9 bn, increased 5,1%
  • Health infrastructure R 10,2 bn,  increased 22%.  This is very appropriate.
  • HIV/Aids and TB R 12,8 bn, increased 17,7%
  • Other health services R 16,4 bn, increased only 3,8%

Possible areas for future consideration by the minister may be:

  • Higher increases in sin taxes
  • Tax allowances or rebates for employee wellness programmes.  This will be in line with international trends and the National Development plan.


 
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