Company Medical Aid

South African companies or employers are not forced by any legislation to provide medical aid to their employees. Most companies still provide this as an additional perk for their workforce. Due to the high cost of medical aid monthly contributions some companies only provide medical aid to employees above a certain income bracket. This is done mainly by companies who offer medical aid perks on a cost to company(CTC) basis. You do get companies who still offer subsidies for medical aid contributions even though the prevalent approach is fast moving towards CTC.

It is common to find companies who offer both a subsidy and a CTC structure. This approach is mainly caused by the high cost of medical aid premiums. The yearly increase on most medical schemes, if not all, for the better part of the past decade has been above normal inflation and usually above salary increase percentages. Many employees are finding it hard to afford a medical aid portion deducted from their salaries. That is why companies who offer both CTC and subsidies will make the subsidy only available to low income earners. There are no longer any tax advantages for employers who provide medical aid subsidy for their employees. However, where the employer pays a certain portion of the employees’ medical aid, this will be taxed as a fringe benefit in the hands of the employee.

Due to the high cost of medical aid contributions, the question often arises whether the employer can force their employees to belong to a medical aid or a certain medical aid. The answer is both yes and no. Yes, if the employer makes it a condition of employment and has duly noted that in the employment contract then the employee will be forced to join the company medical aid. No, if the employer has not made it a condition of employment then they can not force an employee to belong to the company’s choice of medical aid. This more especially where the benefit is provided as a CTC. So, the employee has a right to challenge the employer’s decision to belong to a certain medical aid as some medical schemes will be more affordable than others. Therefore, it goes without saying that companies really need to restructure their employment contracts to make provision for medical scheme memberships.