- Finance Minister calms fears amid growing debate on National Health Insurance funding
South Africa Maintains Medical Tax Credits as Treasury Denies Plans to Scrap Relief. South Africans received some relief this week after Finance Minister Enoch Godongwana confirmed that no decision has been taken to remove medical aid tax credits, despite rising speculation about possible changes linked to the National Health Insurance (NHI) scheme.
Speaking ahead of the Medium-Term Budget Policy Statement (MTBPS), the Minister said he had not authorised, proposed, or endorsed any directive to scrap the credits that millions of taxpayers rely on to reduce their monthly tax burden.
His clarification follows weeks of uncertainty across the health and tax community.
Where the confusion started
Concerns intensified after comments from Dr. Nicholas Crisp, Deputy Director-General of Health, who indicated publicly that the Department of Health had been engaging the National Treasury on a possible phase-out of the medical tax rebate.
According to Crisp, the removal of the credit would create additional funding space for the government’s long-term NHI model.
However, the Treasury had not issued a formal announcement, leading to confusion among medical aid providers, taxpayers, and industry bodies.
Health sector warns of major fallout
The Board of Healthcare Funders (BHF) — representing medical schemes across South Africa — wrote to Treasury Director-General Duncan Pieterse requesting clarity on the matter.
The organisation also raised alarm over a recent Health Department presentation to Parliament showing a proposal to eliminate all medical aid tax credits by 2029, regardless of income level.
The BHF warned that removing the credits before the NHI is fully functional could have severe consequences.
Its commissioned research suggests that:
- up to 690,000 low-income medical scheme members could lose coverage,
- many households may be forced to cut dependents, downgrade plans, or exit private healthcare entirely,
- pressure on the public health system could intensify dramatically.
Analysts say these concerns reflect a reality: private medical aid remains essential for South Africa’s middle-class and lower-middle-income workers.
Finance Minister: “No decision has been taken”
Finance Minister Godongwana stressed that the current tax credit system remains intact.
He also emphasised that those benefiting from the credit make up a significant portion of South Africa’s personal income tax base — meaning any abrupt policy reversal would hit the country’s most reliable taxpayers.
“Removing the tax credit will effectively be an attack on the middle class,”
— Finance Minister Enoch Godongwana
The Minister added that while government departments continue to explore “possible funding pathways” for the NHI, no alternative structure has been approved or recommended.
Treasury officials confirmed that the review of tax options is ongoing, but nothing has been finalised.
Households already under economic pressure
Recent consumer data paints a difficult picture for South Africans.
A national survey conducted in August 2025 found that:
- 41% of households have already reduced spending on medical aid, insurance, or savings,
- 85% are cutting back on non-essentials,
- 83% eat out less frequently,
- 65% favour local, low-cost products over imported brands,
- 62% have switched to cheaper grocery retailers,
- 44% have cancelled gym memberships.
The report also highlighted more severe adjustments:
- 27% have borrowed money from friends or family,
- 29% have sold personal items,
- over one-third have paused education plans.
Analysts say that removing the medical tax credit in this environment could significantly worsen financial strain.
See Also: Nigeria Partners with Over 100 Countries to Track Remote Workers’ Global Income
NHI still faces operational and funding hurdles
Although President Cyril Ramaphosa signed the NHI Bill into law in 2024, implementation remains slow due to:
- funding gaps,
- administrative delays,
- conflicting policy timelines, and
- unresolved coordination issues between departments.
The medical tax credit is one of the few consistent avenues of relief for South African taxpayers, making any proposed removal a sensitive issue.
Treasury officials say discussions will continue, but stakeholders will be consulted before any fundamental changes are made.
Key takeaways
- Medical tax credits remain in place.
- No Cabinet-level decision has been made to phase them out.
- Treasury acknowledges economic pressure on middle-income households.
- The health sector warns that removing credits prematurely could collapse private medical coverage for hundreds of thousands.
- NHI funding debates are ongoing, but no tax mechanism has been adopted.
