How the VAT increase will affect your medical aid
Members of two of the country’s biggest
medical aid schemes can breathe a sigh of relief as the
increase in value-added tax (VAT) will not affect their premiums this year.
Former Finance Miniter Malusi Gigaba announced in February that VAT would increase by 1% from 14% to 15% from April 1.
This is the first VAT increase since 1993.
Discovery Health CEO, Doctor Jonathan Broomberg, says there is no reason for alarm.
"Their premiums won't be affected at all, this year. The will be no any increase in premiums. Of course, the medical scheme has to absorb a significant increase in claims," says Broomberg.
But he warns there might be some premium increases in 2019.
The only impact members might feel is that if they have a medical savings account.
"When they use that use saving plan there will be a one percent increase."
Listen below:
Bonitas Medical Fund principal officer, Gerhard van Emmenis, says medical aid schemes are not allowed to collect VAT so members will not feel the increase.
He explains that medical aid schemes pay input VAT when paying service providers, so the VAT increase will have no direct impact on consumers.
"Because we are a medical aid scheme and we are not allowed to claim VAT. We are not part of the value chain that collects VAT. It stops with us as if we are the consumers, so we cannot claim it," says Van Emmenis.
Listen below: