Maximising your medical aid benefits on your tax return

Kerry Vermeulen, Senior Consulting Manager at Alexander Forbes Health

Medical expenses are increasingly squeezing our purses, with private medical cover being an unavoidable expense for most. However, you can claim certain of these medical costs from the tax collector, offering some relief. Here’s how to maximise your tax refund.

Medical scheme tax credits

Previously medical aid contributions were deducted against income. The medical tax credit system now provides for a monthly credit against your tax owing to the South African Revenue Service (SARS). If you and your dependants belong to a medical scheme, then you will receive a R332 medical tax credit every month in 2022 (R319 in 2021) for the first two members and a further R224 in 2022 (R215 in 2021) every month for every other member or dependant on the same policy. The credit will be automatically deducted off your tax payable.

Medical scheme tax certificate

You will need a tax certificate from your medical scheme to complete the medical section of your annual tax return.

The medical scheme tax certificate details how much was paid to the medical aid for you and your dependants over the course of the tax year (1 March 2020 to end February 2021). It also lists how much money you paid for other medical expenses, such as medicines and doctor’s visits, which you claimed for but your medical aid did not cover.

If you submit all your medical expenses to your medical aid, the amount for these out-of-pocket medical expenses is normally reflected on your tax certificate from the medical scheme as either ‘claims not paid/not recovered from the Scheme’ or ‘amount not reimbursed’, including any part of a claim not paid.

Continue to submit claims paid out of your own pocket to your medical aid

This amount will not include expenses you incurred but did not submit to your medical aid. For this reason, it is important that you continue to submit your claims paid out of your pocket to your medical aid even when your medical savings account or limits are depleted. In this way, these out-of-pocket expenses will reflect on your medical scheme tax certificate at the end of the tax year. SARS still has certain restrictions on what qualifies as an out-of-pocket medical expense and you should consult your tax practitioner.

This information is important for your tax return and can improve your chances of getting a tax refund when you submit your return to SARS. It is important that you discuss this with your tax consultant when submitting your annual tax return to SARS.