Health insurance & tax in South Africa: a simple guide

Calculating health insurance tax

It’s tax return season and South Africans are getting their financial affairs in order. It’s been a tough year for most people and we’re all trying to save where we can so you may be asking “Can I claim tax back on my health insurance?” The simple answer is yes, and it’s easier than you think. Bloom Financial Services explains how to go about maximising your additional medical insurance tax credit using MediTax.

What is MediTax and how does it work?

The South African Revenue Services (SARS) has two provisions for claiming tax back on Healthcare. The Medical Schemes Fees Tax Credit (MTC) is a tax rebate and that only applies to medical aid schemes, whilst the Additional Medical Tax Credit (AMTC) means it is possible for you to claim tax back from qualifying out-of-pocket medical expenses not covered by your health insurance.

Bloom provides policyholders with the MediTax product. This includes providing our members with a complete breakdown of their qualifying medical expenses for a tax rebate. This is done in order to assist the taxpayer when it comes to claiming these qualifying medical expenses back from SARS in one’s annual income tax return. These medical expenses are known as the Additional Medical Tax Credit (AMTC). The AMTC is calculated against the qualifying medical expenses that are not covered by your health insurance plan. The premium MediTax product offering also includes submitting a client’s tax return on their behalf, once this calculation is completed.

Qualifying medical expenses explained

SARS provides credits for excess medical expenses you may have incurred, and which were not covered by your health insurance for that financial year. There are two types of expenses: excess medical aid contributions and qualifying medical expenses by way of the Additional Medical Expenses Tax Credit.

● Excess medical aid contributions. This only applies to those people who have a medical aid plan.
● Qualifying medical expenses. This will apply to those out-of-pocket medical expenses that we are not covered by Health4Me. For instance, the Health4Me Specialist Benefit on the Gold Plan is limited to two visits/consultations annually with a R2,000 limit per member (R1,000 per visit) each year. If you had to pay any additional costs or visit the specialist more than twice, then this would qualify as an out-of-pocket medical expense. Other examples of these out-of-pocket expenses include medication (provided it’s from a registered medical practitioner or pharmacy), or any medical services provided by a physiotherapist, chiropractor, homoeopath or optometrist.
● Hospitalisation that took place in a registered hospital or nursing home.
● Home nursing care provided by a registered nurse, midwife or nursing assistant.
● Any qualifying expenses that were incurred as a result of a physical impairment or disability.

How do you claim Additional Medical Tax Credit?

All registered South African taxpayers can claim back for qualifying medical expenses that are not covered by their health insurance plans. Bloom’s MediTax consultations can assist you with the collation of all your documents that prove these medical expenses and will submit basic tax returns on your behalf, provided your membership fees are up to date for the assessment year. These are the documents that are required for auditing purposes:

● A complete list of all the amounts not submitted to or recovered from the taxpayer’s health insurance plan, with proof of payment for these amounts. If a receipt was made out in the name of a dependent, SARS will accept an affidavit where the taxpayer is able to show that qualifying medical expenses claimed for a dependent were paid by the taxpayer.
● A completed and signed Confirmation of Disability (ITR-DD) form – if applicable.

Please note that a taxpayer is required to keep records, like receipts, paid cheques, bank statements, invoices and deposit slips for five years from the date of submission of the return.

How can I claim tax back on my health insurance?

Here’s a quick and easy formula to follow for calculating your additional medical expenses so that you can claim tax back on health insurance:

Option 1: You are under the age of 65 and without a disability
This is the category that most people fall into and the formula is calculated as your total contributions to your health insurance, less four times your medical scheme fees credit, plus qualifying medical expenses. Then, subtract 7.5% of your taxable income and multiply this figure by 25%.

Options 2: You are over the age of 65 with a disability.
If this option applies to you then your credits are calculated as 33.3% of all your qualifying medical expenses paid by yourself, plus the amount by which the total medical scheme contributions exceed three times medical scheme fee credits.

Options 3: You are over the age of 65 years (with or without a disability)
If you fall into this category, your credits are calculated as 33.3% of your qualifying medical expenses, plus the amount by which your medical scheme contributions exceed three times their medical scheme fee credits.

Example: how to calculate additional medical expenses for a tax rebate

Age & disability status Formula
Under the age of 65 without disability

25% of your: 

  • Total contributions paid the medical scheme 
  • Less (4x medical scheme fees credit) 
  • Plus (qualifying medical expenses paid less 7.5% of the taxable income) 
Under 65 years of age with a disability

33.3% of: 

  • Your total contributions paid to the medical scheme  
  • Less (3 x medical scheme fees credit) 
  • Plus qualifying medical expenses paid 
65 years of age with or without disability

33.3% of: 

  • Your total contributions paid to the medical scheme 
  • Less (3 x medical scheme fees credit) 
  • Plus qualifying medical expenses 

Qualifying physical impairment or disability expenditure explained

This section will only apply to those who qualify for a listed physical impairment or disability. If you do qualify for this option, you can claim additional medical tax credits over and above the other credits listed in points one and two. In order to qualify, the taxpayer or the dependent must qualify in terms of the Income Tax Act, which defines a disability as “a moderate to severe limitation of a person’s ability to function or perform daily activities as a result of a physical, sensory, communication, intellectual or mental impairment; and if the limitation has lasted or has a prognosis of lasting more than a year, and is diagnosed by a duly registered medical practitioner.” Full details can be found on the SARS website.

Qualifying medical expenses that apply for this rebate include the cost of travel, transportation, insurance, personal care, prosthetics, specialist products, service animals, and or other home modifications to accommodate the disability. In order to claim for these expenses, the taxpayer will need to get their medical practitioner to complete an ITR-DD form and it is important to note that your claims will automatically be paid. It must be proven that these expenses are required in order for the person with the disability to be able to function. Some of the details required will include: the nature of the disability, evidence that the expenses were as a result of the disability, and proof of payment for treatments and medication.

Who are the qualifying dependents for tax return purposes?

The following members or dependents qualify:

● Your spouse, including same-sex partners
● Your children, including stepchildren and adopted children
● A parent, parent-in-law, grandparent, sibling or related family member who relies on you for financial support

Affordable healthcare services and assistance when you need it

We hope our guide has answered your question: can I claim tax back on health insurance? Bloom Financial Services is committed to providing affordable health insurance to South Africans. We keep your budget top of mind when it comes to providing top-quality private healthcare. Contact our offices to speak with a trained consultant who can provide you with a free health insurance quote and information, like how to claim tax back from your health insurance plan. .

Medical Content Disclaimer

You understand and acknowledge that all users of the Bloom Financial Services website are responsible for their own medical care, treatment, and oversight. All content provided on the website, is for informational purposes only and does not constitute medical advice. Neither is it intended to be a substitute for an independent professional medical opinion, judgement, diagnosis or treatment.