Q&A

Your finance questions answered. This week, SSIAs and Medical Costs.

SSIAs

I opened a fixed SSIA account with ACCBank in March 2002 at the now attractive rate of 4.5 per cent.

I have paid 100 monthly. I wish to increase this amount to the maximum 254. I telephoned to enquire regarding the procedure etcetera and was told that it would cost me 170 to do this. On reflection I decided that, although the charge seemed excessive it would be worthwhile. I phoned about three weeks later to confirm and check the procedure and was told on this occasion that I would have to pay the Government tax of 23 per cent equalling approximately 700.

Can this be correct? Which is correct? How does this compare with other providers?

Ms G.B., Cork

First things, first. If ACC is allowing you increase your exposure at the 4.5 per cent rate, you are a very lucky investor. In today's interest rate environment, no one, including ACC, would be foolhardy enough to offer such a generous rate - to say nothing about the Government's 25 per cent handout. Even back when SSIAs were being marketed, the ACC rate was a market leader.

Getting down to the brass tacks of the issue, it would appear that there has been a slight breakdown in communication although it is certainly true that there will be a charge for changing the terms of your Special Savings Incentive Account contract.

I contacted the bank and was told that changing the monthly contribution would incur a "break cost". Without having the precise terms of your account - when it was set up and therefore how long it has left to run - the bank was unable to tell me exactly how much you might be due. But it indicated that it would probably be something along the lines of the €170 that you were mentioning.

The precise details would be sent to you by letter when you ask formally to increase the monthly payment.

The 23 per cent charge to which you refer does not click in unless you fail to pay the "break cost" by a certain date. The way it works is that the ACC will need you to pay the break cost manually - by cheque, cash, bank draft or whatever - keeping it separate from the electronic contributions to your SSIA. This needs to be done within 28 days of the change being made.

If you fail to do so, the bank will debit the charge directly against your SSIA account. That would, technically, count as a partial withdrawal from the account and would attract an "exit charge" of 23 per cent - that is the break cost would be deducted from your SSIA and you still owe 23 per cent of that sum again.

It would also count as folly on your part to let it happen. If you are in a position to increase your contribution to 254 from 100 a month and if, as is the case, ACC is willing to let you adjust the contribution upwards while continuing to avail of the 4.5 per cent, the advice I received from everyone I spoke to was that you would be foolish in the extreme to delay. Go for it.

Medical costs

As a family, we are spending 78 per month on repeat prescriptions at our local pharmacy. It is likely that this will continue indefinitely.

As a PAYE worker, can any of this money be claimed back as tax relief from the Revenue Commissioners? If so, can I claim back for the two years I have been on the medication?

Also, each time a family member visits the family doctor, it costs €40. Can any of this money be claimed back and, if so, for what period of time? Do I need doctor's receipts to support the claim?

Mr J.H., Limerick

You do not state whether you are currently availing of the drugs payment scheme operated by the health boards, which is designed to limit expenditure on prescribed drugs. Given the figure you quote, I surmise that you might be as the monthly threshold is €78 a month since the beginning of the year following changes in the Budget.

If not, you should immediately contact the health board. I would be surprised if your local pharmacy had not informed you of this, especially if you are a regular customer, as most are very good at passing on such information. In fact, while you can get the relevant forms from the health board, your local chemist will also have copies.

In relation to the possibilities of getting a refund for past overpayments, I am told by the Mid-Western health board, which covers your area, that you need to get a yellow emergency claim form. This form is also available from your local pharmacy, the health board tells me. Send it in to the address on the form together with all the relevant receipts. You will need to ensure that the receipts are signed.

For the purposes of claiming back-payments, if relevant, the threshold under the drugs payment scheme was €53 a month in 2000, rose to €65 a month in August 2002 and then to €70 at the start of 2003.

Thereafter, you should be claiming money back from the Revenue under long-standing relief available for medical expenses. Again you are looking at filling up forms, in this case the Med 1 form, which is available from any tax office. At the moment, you are entitled to claim relief at whatever is your highest rate of tax on any expenses above €125 for an individual and €250 for a family in a given tax year.

The expenses covered under the scheme now include costs of doctor or consultant fees, prescribed treatment not covered under the health board drugs payment scheme as well as routine maternity care.

However, in past years, the scheme was a little more restrictive.

You do not need to send in receipts with the Med 1 form but you do need to hold on to them in case your claim is examined in detail. So claim only for expenses for which you have receipts.

You can claim costs either in the year they are incurred or the year that you pay them but you must stick with one option for all years of claim. You will receive whatever relief you are entitled to at the end of the relevant tax year.

You can even claim for elderly dependants, who are physically or mentally infirm.

If you have private health insurance at all, through VHI or Bupa, you should check first to see what cover you are entitled to there. Obviously you cannot claim the same money twice - including through any compensation - but between the two schemes, you should be able to substantially reduce the amount you are paying in doctor and drug charges.

By the way, you should also note that you can claim relief on dental expenses, apart from costs incurred for routine work, such as normal check-ups, cleaning and fillings. The form you need in this case is Med 2 and it too is available from any tax office.

• Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or email to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.