What Medical Aid Expenses are Tax Deductible

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If you contribute to a registered medical aid scheme in South Africa, you're eligible for tax relief in the form of tax credits, which are deducted from your annual personal tax liability.  

Credits are non-refundable and fall into two categories:

  • Medical Schemes Tax Credit (MTC), and
  • Additional Medical Expenses Tax Credit (AMTC).

The Medical Schemes Tax Credit 

The MTC is a deductible associated with your monthly contribution. Calculations are based on a fixed rate, and take into account the number of dependents covered by the scheme fees.

If you’re the main member of a medical aid scheme, you and your spouse are entitled to a fixed tax credit of R286 per month. The 2017 rate for each child or dependent is R192 per month.  

You can determine the total tax credit by adding the monthly rates and multiplying them by 12, as in the following example:

  • Main member and first dependent: R286 x 2 = R572
  • Four dependents: R192 x 4 = R768
  • Total tax credit per month: R768 + R572 = R1 340
  • Total annual tax credit: R1 340 x 12 = R16 080

The Additional Medical Expenses Tax Credit

The second tax credit is a rebate on qualifying medical expenses not covered by the medical aid scheme and paid from your personal funds.

Costs relating to MRI and CT scans and healthcare services provided by registered medical practitioners are deemed qualifying expenses by the South African Revenue Services (SARS). Medication prescribed by registered doctors or pharmacists qualifies; over-the-counter medicines do not.

You can also claim back expenses associated with treatments or procedures conducted in registered hospitals or nursing homes, and any medical fees incurred and paid for outside the country.

AMTC based on age and/or disability

Two distinct medical expenses tax credits take age and disability into account:

AMTC tax credit 1

If you're 65 years or older, or are under the age of 65 years and are disabled, or your spouse or a child dependent is disabled, you're eligible for a tax credit totalling 33.3% of your out-of-pocket expenses.

AMTC tax credit 2

All other tax payers can claim back 25% of their personally funded medical costs, if these costs equal more than 7.5% of their taxable income.

Excess medical aid contributions

There’s a second component to the AMTC – excess medical aid contributions. These credits are subject to age and disability, as outlined above, and can be claimed as follows:

  • AMTC tax credit 1: 33.3% of the scheme fees exceeding 3x the MTC
  • AMTC tax credit 2: 25% of contributions above 4x the MTC.

How to deduct medical tax credits 

It’s important to emphasise that medical tax deductibles are non-refundable and can't be carried over to the following tax year. 

How you deduct the medical tax credits depends on how you pay your tax. Provisional tax payers deduct the tax credits from one of two annual IRP6 payments. PAYE tax payers claim the tax credits on assessment, or request the employer to deduct the amount from the monthly tax contribution.

If you don't contribute to a medical aid scheme, you may be missing out on vital medical benefits, and you won't be legally entitled to specific medical tax credits.

Why not chat to an IFC consultant today? We’ll help you find a South African medical aid plan that suits your needs and budget.