Medical Aid in the Workplace 101
So, you finally hear it: You’re hired! The interview process that seemed to take forever has finally come out in your favor. The only thing left to do now is to get the paperwork out of the way. Wait, company medial aid? Included in my Cost to Company? Part of my package? What does all this mean for me?
Before we start a debate on the pro’s & cons of medical aid, let’s take a minute to understand what is meant by “Cost to Company”.
The Cost to Company (CTC) approach to the employees package means that an employer will contribute to your medical aid fund, but this amount has already been incorporated into your salary package. Essentially this means the employer will collect your medical aid contribution, from your salary package, then pay it to the medical aid of your choice, or the employer’s chosen medical aid. The benefit you have, is a taxable benefit and of course, private medical aid cover. It is important to remember that when you are accepting a job offer, and medical aid is inclusive in your CTC package, your employer will not contribute any additional funds to the medical aid. It is also not mandatory for the employer to provide medical aid to their employees, but given the high cost of private medical care in South Africa, this does serve as an additional perk.
So why do you need medical aid you ask? The reality is that your health and that of your family holds immeasurable value. Statistics shows that in 2012, 74% of state health facilities failed to comply with standard cleanliness rules (let that sink in). Furthermore, 55% of state hospitals did not have adequate medicine and supplies. In today’s time, not having medical insurance could be crippling to your finances too. South African private hospitals are open to the general public, irrespective of whether you belong to a medical aid or not. However, these are private enterprises and the service they offer are not free (patients in need of a bypass surgery for a heart attack may have to fork out a cash deposit of R50 000 or more for private hospital care). Enough to make you suffer a heart attack yet? I thought so!
It might seem as if your CTC package is concealing a lot of disadvantages, especially taking into consideration that two employees earning the same gross package could in fact have vast differences when it comes to “take-home” pay. Should the person who earns a R12 000 salary contribute the same amount to medical aid funds as the person who earns a R35 000 salary?
To read more on Medical Insurance as a fringe benefit, and to give you a better idea of your taxable returns, please read more here: https://www.saica.co.za/integritax/2006/1376_Medical_aid_contributions_changes_to_fringe_benefit_rules_and_deductions.htm