Good health is one of the key pillars to a successful retirement, yet this age group is highly vulnerable and the need for hospitalisation increases as one ages.
Statistics show that 60 per cent of an individual's medical expenses are incurred after the retirement age - usually 60 years.
The proposition was put forth in the 2023/24 Budget Statement to provide tax relief of 15 per cent or Sh5,000 on contributions to Post-Retirement Medical Funds (PRMF) and exempt the earned investment income from income tax.
This is a positive step towards addressing the challenges faced by retirees in accessing affordable healthcare. Findings from a 2021 survey by Enwealth Financial Services showed that about 41 per cent of retirees pay for medical bills out of pocket. The report further indicated that less than a third of pensioners have medical insurance, with 20 per cent relying on the National Health Insurance Fund (NHIF).
Unfortunately, many private insurances charge higher premiums for medical insurance or even deny coverage to those aged above 65 due to the perceived higher risk associated with their age.
Senior citizens, therefore, find themselves without adequate medical coverage, relying on their meagre savings to cover healthcare expenses. Due to either lack of awareness or incentive, post-retirement medical funds, on the other hand, have witnessed slow uptake since their inception in 2018.
This is why the government's recent initiative is a commendable consideration. The proposal acknowledges the financial strain faced by retirees and aims to alleviate this burden. It encourages individuals to save for their post-retirement medical needs and ensures that age-related premiums do not become an undefeatable obstacle for the elderly.
By exempting the investment income earned by PRMF from income tax, the government seeks to reduce the strain on government expenditure for medical care. This initiative promotes personal responsibility for healthcare savings while ensuring that retirees have access to dignified healthcare without solely relying on limited government resources. It is a significant step towards building a sustainable and equitable healthcare system.
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