AfriForum demands answers about the future of tax credit on medical aid contributions

3 November 2023

The National Treasury must urgently provide answers regarding allegations that the medical tax credit on medical aid contributions will be scrapped. The civil rights organisation AfriForum demanded this in a legal letter sent to the National Treasury today. This follows after the Department of Health made this claim on Tuesday (31 October) during a presentation to the National Council of Provinces’ Select Committee on Health and Social Services. Prof. Nicholas Crisp, Deputy Director General of Health, meanwhile also referred to the plan in a media interview on Wednesday (1 November) and argued that these funds should instead be used to “enable the public sector to fix some of the things that are broken at the moment”. There is also talk that the tax credit will henceforth be used to help finance the intended National Health Insurance (NHI).

AfriForum maintains that the termination of this tax credit could have disastrous consequences for individuals as well as private medical schemes. According to Louis Boshoff, Campaign Officer at AfriForum, the Department of Health and Crisp’s statements about the scrapping of medical tax credit on medical aid contributions are misleading, as there has by no means been a final decision made on this. “If this tax credit is scrapped, it will imply that a family of four will lose a tax credit of R1 220 per month if they want to remain members of a medical aid. This while NHI is still years away from implementation, if it will ever be implemented,” says Boshoff.

The abolition of this tax benefit could pose a significant obstacle for many South Africans who are already under the pressure of numerous economic challenges. It can also have an impact on the accessibility and affordability of quality healthcare services.

In addition, AfriForum is also concerned that this decision, if implemented, could put private medical schemes in a vulnerable position. The current tax credit served as an incentive for individuals to belong to private medical schemes, which in turn helped to ease the pressure on the public health system. If this financial driving force falls away, there may be a decrease in the number of people who can afford medical aid, which could potentially jeopardise the viability of these funds. This, in turn, can lead to a reduction in competition and the availability of a variety of healthcare services, which can have a negative impact on the entire South African healthcare system.

In its legal letter to the Treasury, AfriForum demands answers to, among other things, the following:

Are there any legislation or legal changes under consideration that may facilitate the repeal of tax credits for medical aid contributions?

What measures, if any, is the Treasury considering to limit the adverse effects that may arise from the abolition of the tax benefit on medical aid contributions, especially for the most vulnerable and low income groups?

Has a socio-economic impact study been undertaken on the matter?

What discussions were held with interested parties, including civil rights organisations and the private medical industry, to obtain and explore input and concerns regarding the potential repeal of tax credits?

According to Boshoff, answers to these questions will provide clarity about the real expectations that South Africans should have in this regard.

Please visit www.jougesondheid.co.za for complete information about the dangers of NHI and how it can be prevented.

Issued by Louis Boshoff, Campaign Officer, AfriForum, 3 November 2023