Author: Editor CEB

As tax season approaches, we reshare important information on preparing for the tax season.

The dates for the 2024 filing season are:

• Auto-assessment notices: 1 July 2024 to 14 July 2024
• Individual taxpayers (non-provisional): 15 July 2024 to 21 October 2024

Minister of Finance, Mr Enoch Godongwana, during his Budget Speech on 21 February 2024, confirmed that the Medical Scheme Fees Tax Credit (MTC) will remain for this tax year. The tax year commenced on 1 March 2024, and the monthly rebates for medical scheme contributions are as follows:

• Taxpayer: R364
• First dependant: R364
• Every subsequent dependant: R246

It is important to understand how this rebate works; it is non-refundable and used to reduce a person’s normal tax. Remember that an employer is obligated to adjust the monthly PAYE deductions by the medical tax credit, and therefore, employees would have already received the medical tax credit during the year if the medical scheme premium is deducted via payroll. Additionally, it follows that these tax credits are thus applicable to taxpayers only.

We encourage South African taxpayers to prepare their relevant financial and supporting documentation to facilitate a smooth filing process. With this in mind, it is important to take note of the following dates:

• The deadline (closing date) for non-provisional taxpayers is 23 November 2024.
• Taxpayers who file online have until 24 October 2024 to submit their return.
• Employers are required to issue employee tax certificates (IRP5/IT3(a)) by 31May 2024.
• Medical Scheme Tax Certificates are usually available from the last week of May and will be shared by your medical scheme. If you have not received your certificate, please contact your medical scheme provider or healthcare intermediary for assistance.

Understanding additional claimable expenses for medical scheme members

The Additional Medical Expenses Tax Credit (AMTC) is a non-refundable rebate and is used to reduce the normal tax a person pays, similar to the MTC. This rebate is calculated against the qualifying out-of-pocket medical expenses that an individual who belongs to a South African registered medical scheme incurred. If you submit all your medical expenses to your medical aid, this amount is normally reflected on the tax certificate from the medical aid as ‘claims not paid’, and you will not need to calculate this yourself when submitting your taxes. Here is a list of qualifying medical expenses:

• Services rendered and medicines supplied by any duly registered medical practitioner, dentist, optometrist, homoeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopaedist.
• Hospitalisation in a registered hospital or nursing home.
• Home nursing by a registered nurse, midwife or nursing assistant, including services supplied by any nursing agency.
• Medicines prescribed by any duly registered medical practitioner and acquired from any duly registered pharmacist.
• Expenditure incurred outside South Africa in respect of services rendered or medicines supplied which are substantially similar to the services and medicines listed above.
• Any expenses prescribed by the Commissioner and incurred because of any physical impairment or disability.

The calculation of the AMTC rebate is fairly complex; it is based on the individual’s taxable income, and there are qualifying categories such as insured persons 65 years and older, insured persons/spouses or children with a disability or persons under 65 with no disability. Please click on this link, or you can access the details of the calculation at www.sars.gov.za.

Paying medical scheme contributions for third parties

When a taxpayer is paying scheme contributions from their personal bank account for a spouse or parents who are not on the same membership, they can include this as part of their SARS return. If SARS requests proof, a medical aid contribution certificate from the medical scheme will be required with proof of payment, as well as a letter indicating the reason you’re making payment where you’re not the main member and whether the spouse or parents are financially dependent on you.

Medical Insurance

This type of insurance is not registered as a medical scheme in South Africa and does not qualify for the above medical tax and additional medical tax credits.

It is advisable to seek out professional tax advice from a registered tax practitioner when filing your returns.

In today’s fast-paced world, getting caught up in short-term financial goals, such as paying off debt or saving for a big purchase is easy. However, have you thought about your long-term financial security? Financial experts emphasise and recommend the importance of planning for retirement and beyond to ensure a comfortable future for yourself and your loved ones.

Here are some of the essential components for your long-term financial planning:

• Start saving and determine how much you require: Financial experts recommend that you aim to save at least 70-80% of your pre-retirement income to maintain your standard of living in retirement.
• Get your finances in order: Take stock of your assets, debt, and investments and evaluate if you are on track. Make a list of your income, expenses, debts, and savings to get a clearer picture of your financial situation.
• Maximise your retirement accounts: Align all your retirement portfolios and savings with your goals. Consider contributing to a tax-free savings account or a retirement annuity to maximise savings.
• Plan for healthcare costs: As you plan for retirement, it’s essential to consider the potential healthcare costs that may arise. Medical expenses can be unexpected and costly, and without adequate cover, they can quickly deplete your savings. To protect your hard-earned retirement funds, explore options for healthcare cover, such as:
  • Medical Aid: A medical aid scheme provides comprehensive cover for medical expenses, including hospital stays, doctor visits, and chronic medication. Research and compare different medical aid options to find one that suits your needs and budget.
  • Medical Insurance: Medical insurance provides cover for specific medical expenses, such as hospital stays or surgeries. It may not be as comprehensive as medical aid, but it can still provide valuable protection for your savings.
  • Gap Cover: Gap cover provides additional protection for unexpected medical expenses that your medical aid may not fully cover.
  When exploring healthcare cover options, consider factors such as premium costs, cover levels, network providers, pre-existing condition coverage and waiting periods.
• Create a lasting legacy: Establish a Will, Living Will, and Power of Attorney for peace of mind. A Will ensures that your assets are distributed according to your wishes, while a Living Will and Power of Attorney ensure that your healthcare and financial decisions are made by someone you trust.
• Choose the right retirement product: Consider your legacy goals and select a suitable option. For example, if you want to leave a legacy for your children, consider investing in a retirement product that provides a guaranteed income for life.
• Seek expert guidance: A financial adviser can help you navigate the complexities of retirement planning, so please engage an expert to get invaluable guidance to ensure your financial security and legacy.
• Start Early: The power of compound interest can work in your favour if you start saving and investing early. The earlier you start planning for retirement, the more time your money has to grow.
• Be consistent: Make saving and investing a regular habit to ensure that you reach your goals. Set up a monthly debit order or automatic transfer from your salary to make saving easier and less prone to being neglected.
• Diversify: Spread your investments across different asset classes to minimise risk and maximise returns. This can help you ride out market fluctuations and ensure that your portfolio grows steadily over time.
• Review and adjust: Regularly review your financial plan and adjust as needed to ensure that you are on track to meet your goals. This may involve rebalancing your portfolio, increasing your savings amount or adjusting your investment mix.
• Consider inflation: Inflation can erode the purchasing power of your money over time, so consider investing in assets that historically perform well during periods of inflation.
• Do not forget about estate planning: In addition to planning for retirement, consider how you want to distribute your assets after you pass away. This may involve setting up a trust, creating a Will or designating beneficiaries for your retirement accounts.

By taking control of your financial future and seeking expert advice, you can build a secure legacy and enjoy a stress-free retirement. Remember, retirement planning is a long-term process and every small step counts.

The NHI bill becomes an Act.

President Cyril Ramaphosa signed the NHI Bill into law on 15 May 2024, making the Bill an Act. In theory, it is somewhat of a milestone in the progress of the National Health Insurance; however, practically, several challenges remain before South Africa reaches a point of quality healthcare access for all.

The President stated, ‘At its essence, the NHI is a commitment to eradicate the stark inequalities that have long determined who receives adequate healthcare and who suffers from neglect.’

There has been uproar, as stakeholders in the healthcare industry are alarmed that the President, despite extensive public engagement, signed the NHI bill into law without significant change.

What does this mean for medical schemes and members?

The short version is that your benefits will not be impacted for a while and will continue in their current form.

Of particular importance is Section 33 of the Act, which sets out that once NHI is fully implemented, medical schemes will only be able to offer services that are not covered by NHI. Many industry experts believe that the version of a ‘fully implemented’ NHI is at least a decade away, with the government estimating ten to fifteen years as a likely timeline.

One consistent comment is that NHI will be implemented in stages. So, for now, and in the near future medical schemes will continue to operate in the manner which we are familiar with, perhaps with the introduction of Low-Cost Benefit Options (LCBOs).

What’s next?

The comments from President Ramaphosa’s speech at the signing of the NHI Bill speak to a more harmonised journey toward universal coverage:

“NHI recognises the respective strengths and capabilities of the public and private health care systems. It aims to ensure that they complement and reinforce each other. Through more effective collaboration between the public and private sectors, we can ensure that the whole is greater than the sum of its parts.”

In contrast, while medical schemes continue to lobby for a collaborative approach to universal health coverage, the Act in its current form alludes to affecting the continuity of medical schemes once NHI is ‘fully implemented’.

The Act in its current form will likely be faced with many legal challenges, further compounded by the legal reforms required to align existing legislation with the NHI framework. Critical areas such as funding mechanisms, human resource reallocation, infrastructure, and implementation processes require clarity.

In essence, the signing into law of the NHI Bill can be viewed as a commitment to universal healthcare coverage rather than implementation being an overnight event. We will continue to update you on the progress of the development of NHI.

In the 2011 film The Grey, Liam Neeson portrays a wolf hunter who attempts to lead seven oil workers through the Alaska wilderness after their plane crashed. He leads them through the heavy snow as they are chased and attacked by relentless wolves. The film, at its heart, is about the human will to survive and what keeps us alive.

It’s a dramatic comparison, but South Africa encountered our survival struggle in February 2023 when we were placed on the grey list.

The “grey list” issue in South Africa refers to the country’s inclusion on the Financial Action Task Force’s (FATF) list of jurisdictions with strategic deficiencies in their anti-money laundering and counter-financing of terrorism (AML/CFT) frameworks. Being on this list can have significant implications for a country’s financial reputation and access to global markets. South Africa’s placement on the grey list has prompted concerns about the effectiveness of its AML/CFT measures and the potential impact on its financial sector. It often requires affected countries to take immediate action to address the identified deficiencies and enhance their regulatory frameworks to comply with international standards.

To get off the grey list, South Africa must take several measures to address the deficiencies identified by the Financial Action Task Force (FATF) in its anti-money laundering and counter-financing of terrorism (AML/CFT) framework. Some of these measures include:

1. Strengthening Legislation: South Africa may need to enact or amend existing laws to enhance its legal framework for combating money laundering and terrorist financing. This could involve updating regulations, increasing penalties for violations, and improving mechanisms for enforcement.
2. Enhancing Regulatory Frameworks: The country must bolster its regulatory bodies responsible for overseeing financial institutions and ensuring compliance with AML/CFT measures. This may involve providing additional resources, training, and guidance to regulatory authorities to improve their effectiveness.
3. Improving Financial Intelligence Capabilities: South Africa needs to enhance its capacity to gather, analyse, and share financial intelligence related to money laundering and terrorist financing activities. This may involve strengthening collaboration between law enforcement agencies, financial institutions, and other relevant stakeholders.
4. Implementing Risk-Based Approach: Adopting a risk-based approach to AML/CFT measures allows South Africa to prioritise resources and efforts in areas with the highest risk of illicit financial activities. This involves conducting risk assessments, implementing appropriate mitigation measures, and regularly reviewing and updating risk profiles.
5. Enhancing International Cooperation: South Africa must strengthen its cooperation with other countries and international organisations to combat cross-border money laundering and terrorist financing activities effectively. This may involve improving information-sharing mechanisms, extradition treaties, and mutual legal assistance agreements.

The February 2024 FATF Plenary adopted a report by the Joint Group, which confirms that five of the twenty-two required Action Items are now addressed or largely addressed. These relate to the legal provisions criminalising terrorist financing and underpinning South Africa’s targeted financial sanction regimes related to terrorism financing and proliferation financing, increasing the use of financial intelligence from the Financial Intelligence Centre to support money laundering investigations, and increasing the resources of AML/CFT supervisors.

In a recent media statement release, the National Treasury stated that while South Africa is on track to address all the outstanding action items, it remains a challenge to address all seventeen of the remaining action items by February 2025. All relevant agencies and authorities will need to continue to demonstrate significant improvements. Additionally, these improvements must be sustained.

Let’s hope that South Africa achieves a better outcome than Liam Neeson and his fellow survivors experienced in the film and that we don’t end up at the mercy of the wolves.

Minister of Finance, Mr Enoch Godongwana, during his Budget Speech on 21 February 2024, confirmed that the Medical Scheme Fees Tax Credit (MTC) will remain for this tax year. The tax year commenced on 1 March 2024, and the monthly rebates for medical scheme contributions are as follows:

• Taxpayer: R364
• First dependant: R364
• Every subsequent dependant: R246

It is important to understand how this rebate works; it is non-refundable and is used to reduce the normal tax a person pays. Remember that an employer is obligated to adjust the monthly PAYE deductions by the medical tax credit, and therefore, employees would have already received the medical tax credit during the year if the medical scheme premium is deducted via payroll. Additionally, it follows that these tax credits are thus applicable to taxpayers only.

We always encourage South African taxpayers to prepare their relevant financial and supporting documentation well in advance to facilitate a smooth filing process. With this in mind, it is important to take note of the following dates:

• The deadline (closing date) for non-provisional taxpayers is 23 November 2024
• Taxpayers who file online have until 24 October 2024 to submit their return
• Employers are required to issue employee tax certificates (IRP5/IT3(a)) by 31May 2024
• Medical Scheme Tax Certificates are usually available from the last week of May

Understanding additional claimable expenses for Medical Scheme Members

The Additional Medical Expenses Tax Credit (AMTC) is a non-refundable rebate and is used to reduce the normal tax a person pays, similar to the MTC. This rebate is calculated against the qualifying out-of-pocket medical expenses that an individual who belongs to a South African registered medical scheme incurred. If you submit all your medical expenses to your medical aid, this amount is normally reflected on the tax certificate from the Medical Aid as ‘claims not paid’, and you will not need to calculate this yourself when submitting your taxes. Here is a list of qualifying medical expenses:

• Services rendered and medicines supplied by any duly registered medical practitioner, dentist, optometrist, homoeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopaedist.
• Hospitalisation in a registered hospital or nursing home.
• Home nursing by a registered nurse, midwife or nursing assistant, including services supplied by any nursing agency.
• Medicines prescribed by any duly registered medical practitioner and acquired from any duly registered pharmacist.
• Expenditure incurred outside South Africa in respect of services rendered or medicines supplied which are substantially similar to the services and medicines listed above.
• Any expenses prescribed by the Commissioner and incurred because of any physical impairment or disability.

The calculation of the AMTC rebate is fairly complex; it is based on the individual’s taxable income, and there are qualifying categories such as insured persons 65 years and older, insured persons/spouse or child with a disability or persons under 65 with no disability. Please click on this link, or you can access the details of the calculation on www.sars.gov.za.

Paying Medical Scheme Contributions for 3rd parties.

When a taxpayer is paying scheme contributions from their personal bank account for a spouse or parents who are not on the same membership, they can include this as part of their SARS return. If SARS requests proof, a Medical Aid contribution certificate from the medical scheme will be required with proof of payment, as well as a letter indicating the reason you’re making payment where you’re not the main member and whether the spouse or parents are financially dependent on you.

Medical Insurance

This is a type of insurance which is not registered as a medical scheme in South Africa and does not qualify for the above medical tax and additional medical tax credits.

It is advisable to seek out professional tax advice from a registered tax practitioner when filing your returns.

The retirement industry eagerly anticipates what could be its most significant reform, while the healthcare sector braces, some with apprehension, for the National Health Insurance bill to pass into law.

Two pot system – 1 September 2024

After much toing and froing, it appears that a final date has been decided for the implementation of the two-component (‘two pot’) system, in terms of the Revenue Laws Amendment Bill and Pension Funds Amendment Bill, although parliament is yet to give its final stamp of approval.

In summary, the two-component system, effective 1 September 2024, will mean:

• If you contribute to a retirement fund, 1/3 of your contribution will be allocated to a savings component, and 2/3 of your contribution will be allocated to a retirement component.
• 10% of your vested component (this is the value of your fund prior to 1 September 2024), up to a maximum of R30 000, will be moved to your savings component. This ‘seed’ capital is a ‘once off’ to assist members who need access to capital when the system kicks in. Further withdrawals will be based on balances in the savings component.
• Withdrawals, allowed once a year, are subject to tax at your marginal (normal) rate.
• You will not have access to your retirement component until you retire.
• Your vested component will still be subject to the Rules that applied before 1 September 2024, which means you can take your benefit in cash on withdrawal.
• Deductions for maintenance and divorce orders, housing loans and employer compensation for fraud, theft, misconduct, and dishonesty will be applied proportionately across the three components (savings, retirement and vested).

Concerns and comments

A major concern is the delay in the passing of the final bill, which means retirement funds will have to amend their rules without knowing whether there will be changes once the final bill is passed. Another concern is the expectation members may have regarding seeding capital. Members may expect to receive payment soon after the effective date; however, this is unlikely, given the large volumes of claims expected and whether administrators and SARS are able to cope.

The two-component system emerged out of the dire need by members, exacerbated by the COVID-19 pandemic, for financial assistance. The new system will allow members to have access to their retirement savings, albeit with certain limitations, without having to leave employment. Members must be encouraged only to access funds in their savings component for emergencies and not use the savings component as a transactional account.

Frequent withdrawals mean more tax and a reduced income at retirement. The other positive effect of the new system is to ensure higher preservation levels by not allowing access to 2/3 of contributions plus growth until a member retires.

NHI Bill – President to sign into law (SONA 8 February 2024– ready to sign)

Speaking at the 2024 State of the Nation Address earlier this month, President Ramaphosa joked that he was “looking for a pen” to sign the NHI into law after it was recently passed by the National Council of Provinces (NCOP). The NHI aims to introduce universal healthcare. “We plan to incrementally implement the NHI, dealing with issues like health system financing, the health workforce, medical products, vaccines and technologies, and health information systems,” said Ramaphosa. The Bill has received harsh criticism from those in the healthcare sector, doctors, and business leaders. Primary concerns raised are in respect of how the new system will be funded and the fear that the poor taxpayer will have to foot the bill. Although the bill has passed through parliament, the general consensus is that the bill (at least in its current version) is unlikely to be operational for some time.

TCF and Reg 28 principles

In December 2023, the Financial Conduct Services Authority (FSCA) sent a survey out to the Principal Officers of retirement funds, requesting information relating to transformation in respect of Regulation 28-linked service providers.

Funds were requested to complete the following assessment:

• Treating Customers Fairly (TCF) self-assessment about the implementation of measures to meet the TCF outcomes. This part of the assessment is not new – many funds have completed it already.
• The Regulation 28 principles of self-assessment with regards to the implementation of measures to consider in contracting services to a fund or its board.

The assessment had to be returned to the FSCA through its online submission portal by 31 January 2024, although I am aware that the FSCA is prepared to grant an extension, on application.

Breaking news!

• President Ramaphosa announces election date: 29 May 2024.
• Minister of Finance, Enoch Godongwana, delivered the 2024 budget speech, advising that the Health portfolio would be allocated R848 billon over the Medium-Term Expenditure Framework (MTEF), confirming government’s commitment to its NHI policy. The 1 September 2024 implementation date for the Two-Pot system was confirmed.

We will continue to keep you updated on any further developments regarding these legislative pieces, with particular emphasis on the National Health Insurance Bill and the ‘Two-Component’ Retirement System.

Happy 2024! Amazingly, we’re almost at the end of January, and with the children back at school, we can proclaim that the year is officially in full swing. Here’s the thing we all know– life moves ahead often in full swing whether you’re ready or not. In a world that is becoming increasingly fast-paced, I often find myself in conversations about how there aren’t enough hours in the day, and there I am, nodding in agreement.

In our January edition, I usually write about goal setting for the year, so if you’re in that space, click here and here for my previous articles that have some great tips. This year is a little different; I find myself searching for ways to optimise time so I can create focused time to work on my goals, the coveted one being increasing productivity.

Sharing Ideas for Things in Life That We Can’t Wholly Automate

We have embraced technology to make life simpler; you probably will hear me saying ‘Hey Siri’ a couple of times a day. For example, I find asking Siri to put a reminder in my calendar efficient, as opposed to manually entering it. There are some things that AI can’t do, so I put together some random quick tips that have helped create efficiency in my peers and my daily life.

Car License Renewal

Up until this year, I would religiously fill out my form and queue at my local South African post office for my disc renewal. Did you know that you can complete your disc renewal at a supported Spar or Pick n Pay as well? You could also do this online now.

Quick Meals

I should call this one Air Fryer! I have not taken the plunge yet, but those who use this appliance swear by it. It’s so big that local grocers now include cooking instructions for Air Fryers on their items.

I find having a meal plan for the week helps (there are varying degrees of how detailed this can be), but it does help to at least have a basic idea of the meals you want to prepare.

Online Grocery Shopping

This seems like a natural progression from the point above. I use this often; I add things to my basket as I remember I need them or do a quick online ‘grocery run.’ While waiting, I continue working, and in 60 minutes I have my groceries delivered to me. I ask the driver to meet me at my car, and it goes straight into my boot. Groceries done!

Self-Care and Personal Grooming – Multi Treatments in One Appointment

Finding a provider where you can have more than one treatment is high on the efficiency list and leaves you with a serotonin boost. I can get my hair cut, beard trimmed, and manicured in 60 minutes, and I hear the ladies have similar wins.

A little sidebar for the gents: an instant shoeshine cleaner has been lifesaving, especially before early morning meetings. Also, check out wrinkle-free shirts if you are pedantic about ironing.

Effective Meetings – ‘Winning the Meeting Happens Before the Meeting’

We know that some meetings do not need to be an hour at minimum, and we are seeing a culture shift; where appropriate, meetings are shorter. Preparation is key, and a somewhat detailed agenda with clear intentions can help attendees to bring more meaningful points into the meeting.

Another pain point is meeting minutes; you could use voice dictation features on your smartphone or computer for quick notetaking. There are apps, as well, that assist with at least creating the raw draft for you to edit and finalise.

Work from Home (WFH)

There is a lot of subject matter on this, and most of us have some experience with WFH. The biggest plus of this is time saved on commuting.

One-Touch Rule

This idea revolves around handling each task or document only once to avoid procrastination and unnecessary time spent on decision-making. Once you touch it, you complete the task or document.

Quick Workouts

Having a plan can help you get the most out of your workout when you have limited time. The are a lot of apps that can help you with a guided workout. Check out Caliber, the Virgin Active app or even Netflix.

Mindful Tasking (Audios)

This is a great way to give an audiobook or podcast a listen and learn a new skill while doing another activity. You could do this on your daily commute, or while cooking dinner.

Meditate

Meditation means different things to different people. The key takeaway here is that you have a clear mind so you can optimise the time you have for specific tasks. A quick round-robin revealed that people ‘meditate’ by taking sanity breaks which could be a walk in the garden, coffee breaks, all the way up to yoga and full-on meditation.

Set Your Intention

The most common idea from everyone I have been speaking to is to set your intention. It creates clarity and helps you hone in on the task/activity ahead of you.

On the point of setting your intention, have you considered what your word for the year will be? Consider selecting a single word that guides you in your actions for the year ahead, a word that keeps you true to your overarching core value. The power of choosing one focus word is to use the word as a lens. Remember, this word isn’t just a label; it infuses every decision with intentionality.

Wishing you well for the year ahead.

One of the wonderful realities of retirement is that of longevity. People are living longer due to higher standards of living, healthier lifestyles, better nutrition, and advanced medical treatment.

The challenge this produces is ensuring you have enough retirement savings and medical aid provision for your extended golden years.

Many people rely exclusively on their company pension or provident fund for their retirement. The harsh reality is that this may not be enough.

Current economic conditions are not easy, and many people are struggling to make ends meet. Subsequently, this can lead to retirement savings being ranked as low priority. This situation snowballs because the closer they get to retirement, the more difficult it is to make adequate provision due to the reducing period available to save.

When someone says that they can’t afford to save for retirement, this means that they won’t be able to afford to retire.

Pay yourself first

One of the sagest pieces of advice is to pay yourself first. This means the first deduction from your monthly salary should be for retirement purposes. Consistent and planned saving will ensure that you will achieve your financial goals.

We are almost at the start of a new year – it is a time to make resolutions that are achievable and meaningful. As your retirement fund contributions are tax deductible up to 27.5% of your taxable salary, resolve to make additional voluntary contributions to your fund and let SARS pay part of your retirement benefit. If you have a marginal tax rate of, say 35%, SARS pays 35% via the deductibility of contributions in your hands.

Avoiding life’s potholes

Avoid retirement-inhibiting potholes you encounter in your life journey, like taking a taxed cash benefit if you change jobs. Rather, preserve your benefit for its intended application. You will thank yourself later!

Don’t be seduced by the false promise of withdrawing funds with the implementation of the “Two Pot” system to service your lifestyle. It is intended to provide a facility to have access to funds in the event of an emergency. By withdrawing funds, you are reducing your future financial security.

Inflation, especially medical cost inflation, is a serious concern, as it reduces the purchasing power of your pension. Prices of goods seem to be out of control, and it is naive to think this will not affect your pension.

Be positive and visualise your retirement years

A powerful tool is to visualise what you want your retirement to be like and actively imagine yourself in that position. Through positive thinking and visualisation, you are more motivated to plan accordingly, which will assist you in achieving your goals for retirement.

It is encouraging to see that the number of people making additional provision and preserving their retirement benefits on exiting a job is increasing, as they start to understand the implications and advantages of doing this.

After all, it is your money, and you are the one in control of it.

One late afternoon twenty years ago, we heard a loud commotion on the main thoroughfare directly opposite our home.

There was a dreadful accident where a taxi had ignored a red light and collided with a pedestrian. This pedestrian was the husband of our domestic worker. He survived the collision and was airlifted by helicopter to Milpark Hospital. He never really recovered from the accident and sadly had to abandon his promising building and construction business.

We had to procure the services of a lawyer to assist with the Road Accident Fund (RAF) claim to ensure he received the necessary treatment and care over the next few years. This was our first encounter with this state institution.

All South African road users contribute to the RAF in the form of a fuel levy. The RAF fuel levy provides personal insurance cover (general damages, funeral cover, loss of support, loss of income and past and future medical expenses) to road accident victims, or their families, and indemnity cover to wrongdoers (who cause accidents). The RAF receives more than R45 billion per year through this fuel levy.

When a medical scheme covers treatment related to a road accident, these claims can be recovered from the RAF to ensure that member reserves are protected.

In October 2022, the RAF issued a directive to reject all claims for medical expenses where these expenses were paid by medical schemes, not by the claimants.

Discovery Health Medical Scheme, the largest administrator of medical schemes in South Africa, opposed the directive and brought an urgent application in the Pretoria High Court against the RAF and transport minister Fikile Mbalula to interdict the RAF from implementing the directive.

In January 2023, the High Court in Pretoria interdicted the RAF from implementing this directive. The RAF brought an application for leave to appeal against the decision, which was dismissed by the High Court with costs. The decision provides medical schemes and their administrators with assurance that they can continue to claim from the RAF on behalf of their members. The setting aside of this unlawful directive protects medical scheme members from having to pay twice for protection against medical expenses associated with road accidents – through the fuel levy and then again through their medical scheme contributions . In court papers submitted when it brought its application last year, Discovery said the RAF’s directive could result in medical schemes losing about R500 million a year.

You may have noted media coverage around the proposed changes to the Road Accident Fund Act, which has specific implications for all members of medical schemes.

The proposed changes suggest that medical scheme members be treated differently from those who do not belong to medical schemes – despite contributing equally to the RAF fuel levy. The changes include, amongst many others, that medical scheme members would no longer be eligible to claim back past medical expenses. This would affect injured members and all members of medical schemes because the Scheme reserves will not be replenished. These reserves help ensure the sustainability of the Scheme and keep contribution increases affordable.

The medical scheme industry is lobbying to prevent the promulgation of these proposed legislative changes.

As of going to print, it has just come to light that the Constitutional Court has rejected the RAF application to appeal against a High Court ruling compelling it to resume payments to medical schemes.

Let’s hope that this decision will affect the outcome of the passing of the RAF Amendment Bill and sense will prevail.

The recent Mediclinic fraudulent claims allegations have brought industry fraud challenges back in focus, resulting in the hospital healthcare group launching an independent investigation headed by Steve Powel, the head of law firm ENSafrica’s forensic practice.

At the last Fraud, Waste and Abuse (FWA) Summit, the Council for Medical Schemes (CMS) shared that the healthcare sector experiences losses of between R22 -28 billion per year due to fraud, waste and abuse, while others estimate the cost to the industry to be around 15% of all claims due to fraud, waste and abuse.

Healthcare fraud can have devastating effects as this increases the cost of care, adding to already increasing health insurance and medical scheme premiums. This criminal offence is one of the drivers of accelerated medical inflation, which is then levied against insured persons. The social impact can lead to poor health regulation.

Types of Fraud, not limited to:

• Patients – fraudulent provision of sickness certificates, prescription fraud, non-disclosure of pre-existing medical conditions, colluding with service providers to submit false claims.
• Medical professionals – billing for services or procedures never rendered (inflation of the patient diagnosis code), performing unnecessary services solely for the purpose of generating payment and accepting kickbacks for patient referrals.

How to Prevent and Avoid Healthcare Fraud

• Report fraud; contact your healthcare insurer as soon as possible if you suspect you may be a victim.
• Check your policy or membership claims and benefit statement.
• Be informed about your role as a customer, and never be afraid to ask questions about the procedure to your healthcare provider and the applicable billing.

Regulation

On 24 November 2022, the Council for Medical Scheme (CMS) and various stakeholders in the private healthcare sector, such as the Board of Healthcare Funders (BHF), Financial Intelligence Centre (FIC), Healthcare Professional Council of South Africa (HPCSA), Corruption Watch, and medical scheme administrators adopted the industry Code of Good Practice(CoGP).

CoGP is a principled approach including, but not confined to the prevention, investigation, and penalisation methods to mitigate and manage Fraud, Waste and Abuse(FWA) to facilitate the resolution of disputes in FWA-related matters according to Section 59 of the Medical Schemes Act( Act 31 of 1998). The code details the roles, responsibilities and rights of members/beneficiaries, 3rd parties, healthcare providers, healthcare facilities and regulators. This also includes policies, procedures as well as the methodologies to be used in the prevention, detection, and investigation process.

The curtailment of loss through fraud can have a ripple beneficial effect, as it could result in medical insurers and medical schemes having additional provisions to enhance their benefits and bring about a much-needed reduction in medical inflation. This, in turn can affect the affordability of private healthcare cover. All healthcare industry stakeholders have a responsibility to report fraud by taking the necessary steps; in doing so we protect the integrity of the country’s healthcare system.

Complaints channels with various healthcare providers:

• Health Professionals – www.hpcsa.co.za
• Private Hospitals – www.hasa.co.za
• Nurses– www.sanc.co.za
• Brokers – www.faisombud.co.za
• Medical Schemes – www.medicalschemes.co.za
• Other Health Insurance Products – www.osti.co.za (short-term insurance ombudsman) or www.ombud.co.za (long term insurance ombudsman)