Will a medical insurance fund qualify for a medical scheme rebate in respect of section 6A and 6B?
23 February 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: A client of mine contributes to a medical
insurance fund for himself and his wife. His monthly premium is R1 927.00 and
it allows him access to medical practitioners, dentist, scripted medication,
pathology and radiology services, and specialist (all within specified limits).
I claimed for the tax credit on medical funds,
because in my opinion there is little difference between the medical insurance
fund and a medical scheme. Could you please clarify if I am correct?
A: National Treasury has stated the principal differences as follows:
insurance policy is a binding contract issued by an insurance company to an
individual. The policy can be sold by an insurance company in terms of the Long
Term Insurance Act or Short Term Insurance Act and is subject to regulatory
oversight by the Financial Services Board ("FSB”). The policy promises to pay
for certain stated benefits when the individual is ill or injured. The
individual pays a certain premium which is directly related to the age, health
status or income of the individual. Specific type of exclusions may also be
built into a policy, which can have the effect of limiting who the policy can
be sold to.
are regulated in terms of the Medical Schemes Act and are subject to regulatory
oversight by the Council of Medical Schemes ("CMS”). They are non-profit
organisations and belong to their members. Medical schemes operate through the
collective pooling of good and bad risks, and may not discriminate between
individuals based on age or health status. Contributions apply universally to
all members who are enrolled and may only vary in respect of the cover
provided. Different benefits options are priced differently depending on the
level of cover afforded and are determined by the rules of the scheme. The
effect is that there are equal premium contributions for high and low risk
members, which promotes greater equity in the scheme.
contributions to a medical scheme will qualify for the medical scheme rebate in
terms of section 6A and 6B of the Income Tax Act.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.