Question

I retired three years ago, with half my income coming from my company pension fund and the other half from interest from investments. I am paying tax at a rate of 41%. Is there anything that I can do to reduce this amount?

Answer

If you leave your medical aid and want to join again in the future, the medical aid does have the right to impose waiting periods when it comes to covering certain medical conditions that you may have at that time. You run the risk of not having cover for certain conditions for a period of as long as a year. 

This is a big decision and there are a number of things that you should consider.

Is your medical aid really too expensive?  While the premiums for a medical may be high, the impact on your finances, should a claim occur and you don’t have the cover, could be devastating.

I recently had a family member have a 4 month stay in hospital.  The various hospital and doctor bills which the medical aid covered, were significantly more than the premiums paid.   

You do have the option of using the state medical facilities. The downside here is, there are often long queues.  The time spent in queues can have a financial impact, especially if you work for yourself.

Instead of leaving your medical aid, an option that you can rather consider is to downgrade to a lower plan within your medical aid. Each medical aid has several options that you can choose from. These options offer more comprehensive cover and may cover the medical bills to a higher multiple of the standard rates. 

You are allowed to downgrade your medical cover at any stage during the year. This should result in a lower premium. You will, however, only be allowed to upgrade your cover once a year on the medical aid anniversary date. 

I would recommend that you have a chat to a financial advisor who specializes in medical aids. They often have computer packages which list all the benefits under each medical option, and you should be able to find the sweet spot where you have sufficient cover at a more affordable rate. The advantage here is that when you want to upgrade your cover in the future on the anniversary date, there will be no waiting periods applied.

Insider tip

A hospital plan typically covers you at a standard rate.  However, many doctors charge quite a bit more than this rate.  You should therefore also consider taking out gap cover. Gap Cover typically covers the gap between what the hospital and doctors charge for your treatment and what your medical aid pays.  This cover is not that expensive. 

To summarize, be careful about leaving your medical aid, as it is not always that easy to rejoin without having conditions imposed. Rather explore the option of downgrading to a hospital plan with gap cover.  You should have the option of upgrading to a better plan on the anniversary date of the scheme, should your medical condition take a turn for the worse during the year.