The amount deducted from your salary for the NHI will depend on several factors, including your income level, tax contributions, and the specific NHI funding model adopted by the government. Here’s a breakdown of the anticipated NHI contribution amounts based on current proposals:
1. Payroll Tax Contribution
The Department of Health has proposed a payroll tax of around R1,500 per month for formally employed South Africans. This means that if you’re employed and earn an average salary, you’ll likely see this amount deducted from your paycheck monthly.
2. Income Surcharge
For those earning above a certain threshold, a 2% income surcharge will apply. For example, if you earn R26,000 per month, the surcharge would cost approximately R1,040 per month. This surcharge ensures that higher-income earners contribute a proportional amount to the NHI Fund.
3. Removal of Medical Aid Tax Credits
Currently, taxpayers can receive a tax credit of R364 per month if they contribute to a medical aid. However, the NHI plan includes the removal of this tax credit, effectively increasing an individual’s tax burden by R364 each month. This will further impact monthly take-home pay, particularly for those who currently rely on medical aid tax relief.
4. Employer Contributions
Employers will also contribute to the NHI by matching their employees’ payroll tax contributions. This employer contribution does not directly affect your paycheck but represents a significant shift in how health funding is structured in South Africa.
Example: Monthly NHI Contribution for an Average Earner
To provide a clearer picture, here’s a sample calculation of the expected monthly NHI contribution for someone earning R26,000 per month:
- Payroll Tax: R1,500
- 2% Surcharge: R1,040
- Loss of Medical Aid Tax Credit: R364
This comes to a total of R2,904 per month that would effectively go towards the NHI Fund, including the additional impact from the removal of the tax credit.
Who Doesn’t Have to Contribute?
Individuals below a specified income threshold are expected to be exempt from direct payments to the NHI Fund, helping ensure that lower-income earners still receive access to essential health services without an added financial burden. This detail aligns with the NHI’s goal to make healthcare equitable and accessible for all South Africans.
What Services Won’t Be Covered by the NHI?
It’s important to note that medical schemes will only be allowed to cover top-up services that are not covered by the NHI. This means that if you wish to continue with medical aid, it will only be to cover specific services outside the NHI’s coverage. Medical schemes will be relegated to paying for benefits with non-NHI contracted providers, which may limit their use compared to their current role.
Preparing for the NHI: How to Budget for This Change
The NHI represents a shift in how healthcare will be funded and accessed in South Africa. For many, these additional contributions will require adjustments in budgeting and planning for healthcare needs. Here are a few tips to consider as you prepare:
- Review Your Monthly Expenses: Assess your current expenses and determine how the estimated NHI contribution will impact your budget.
- Consider Health Savings: If you’re currently on a medical aid, start exploring how the NHI will change your coverage needs.
- Stay Updated on NHI Developments: The exact contribution requirements may evolve as the NHI rolls out, so staying informed will help you plan effectively.