Net cost of medical aid after the medical scheme fees tax credit.
Net monthly cost
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Monthly tax credit
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Cost as % of premium
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Pre-tax income needed
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The sticker price is not the real price
When a medical scheme quotes you a premium, that is not what the cover actually costs you. SARS gives every paying member a medical scheme fees tax credit, a fixed monthly amount that reduces your tax bill based purely on how many people are on the plan. Subtract that credit from the premium and you get the true net cost. This calculator does exactly that, then takes it one step further by working out the gross salary you must earn to fund the net premium, because you pay it from money that has already been taxed.
The credit is a rebate against tax, not a deduction from income, which has an important consequence: its rand value is the same whether you earn R200,000 or R2 million. A R974 monthly credit reduces a low earner's tax by exactly as much as a high earner's. That flat design is intentional, and it makes the credit proportionally more valuable to people on lower incomes.
From premium to gross salary, step by step
Take the defaults: a R4,500 premium for three members, with a 31 percent marginal tax rate. The three members are the main member, the first dependant, and one further dependant. Using the credit amounts this calculator applies, here is the full chain from premium to the pre-tax income you need.
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So the R4,500 plan really costs R3,526 after the credit, but to have R3,526 of after-tax money at a 31 percent marginal rate you must earn about R5,110 before tax. That last figure is the one most household budgets ignore, and it is why medical aid quietly consumes a larger slice of gross pay than the premium suggests.
Who should lean on the pre-tax figure
This tool earns its keep for anyone weighing whether a plan is genuinely affordable, and especially for the self-employed and freelancers who must carry the full premium themselves with no employer subsidy. If you are deciding between a comprehensive option and a hospital plan, compare the net costs rather than the headline premiums, because the credit is identical on both, so it shrinks the gap less than you might hope. The higher your marginal rate, the more pre-tax income each rand of premium demands, so a top-bracket earner funding a family plan feels the squeeze most.
A common error is double-counting the benefit. Some people assume they both deduct the premium and claim the credit. For ordinary medical scheme contributions you get the credit, full stop; there is no separate income deduction for the premium itself. The credit already is the relief. Out-of-pocket expenses above set thresholds can attract a further additional credit, but that is a different calculation handled elsewhere.
If my employer pays half my premium, what do I enter?
Enter the full premium and the full number of members, because the tax credit is based on the scheme, not on who pays. Just remember the net cost the tool shows is the after-credit cost of the whole premium. If your employer covers half, your own out-of-pocket share is roughly half of that, though the fringe-benefit treatment of an employer contribution can affect your taxable income, so check your payslip and confirm with SARS.
Does a higher-income earner get a smaller credit?
No. The credit is a fixed rand amount per member and does not taper with income, unlike some means-tested benefits. A family of three attracts the same R974 monthly credit at every income level. What changes with income is the pre-tax salary needed to fund the net cost, because that depends on your marginal rate, not on the credit.