Asked by Anonymous
Asked on 28 Jun 2019
Some financial planners claimed that it is better to upgrade ElderShield and Integrated Shield to private hospital since CPF Medisave has limited usability and has caps for the uses. Hence they feel it is better to use it to pay for all the premiums. So, it is true?
Top Contributor (Nov)
Firstly, we must understand that the payouts from Eldershield (ES) and Medishield Life (MSL) are going to be limited in nature. They are national schemes and hence cannot possibly give maximum coverage and high limits to every Singaporean or PR. Thus, the question to ask would be: if I was hospitalized or lost the ability to do activities of daily living, how much money do I think I will need? While the answer to this is subjective, once you realise that MSL yearly limit is $100K and ES pays $400/mth for only 6 years, you will know for yourself if you think it is enough.
Next, consider the fact that no one is forcing you to go with a private hospital plan, or upgrade Eldershield to a $5000/mth pay out. Your medisave money can only be used in limited ways, and thus, while we don't know the hospital or nursing home bill, we do know what we can expect in terms of our premiums. There are limits on the use of Medisave money for upgrading your MSL and ES. Even if you stick within those limits, you can considerably boost your coverage. Medisave money can't be taken out in most cases after all.
If you top MA up to the Basic Healthcare Sum(BHS), all excess amounts would flow over to SA till FRS, then to OA. As such, some people advocated the topping up of Medisave to BHS on 1st Janurary every year so that the subsequent medisave contributions would flow to SA
One “hack” would be to maximise it to bhs limit to get the guaranteed interest.. then use it for your premiums, but quickly TOP up the premium used with cash which can help you to offset your assessable income for income taxes...