I'm self-employed. Why do I still have to make compulsory Medisave contribution when I already have a full comprehensive integrated shield plan? Shouldn't there be a choice? - Seedly

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Asked by Anonymous

Asked on 12 Jun 2019

I'm self-employed. Why do I still have to make compulsory Medisave contribution when I already have a full comprehensive integrated shield plan? Shouldn't there be a choice?

What would be the crucial differences between Medisave and my own integrated shield plans since i'm allocating money to both?

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CPF Board
CPF Board
Level 6. Master
Answered on 26 Jun 2019

Hi, MediSave is a national medical savings scheme which helps CPF members like you save for your own and your approved dependants’ healthcare expenses.

On the other hand, MediShield Life is a basic healthcare insurance scheme that helps pay for large hospital bills and expensive outpatient treatments, and an Integrated Shield Plan (IP) is a medical insurance plan which offers additional benefits on top of that provided by MediShield Life.

MediSave Contributions as an SEP

As an SEP, you do not receive regular MediSave contributions from employers. Even though you are covered under an IP, the IP does not cover as many medical treatments as compared to MediSave. It is therefore important to contribute regularly and make sure you have sufficient MediSave savings for your future healthcare needs. This is especially important during old age when you may have stopped working, and the need and expenses for medical treatment increases.

You can use MediSave to pay for hospitalisation expenses and day surgeries. You can also use MediSave to pay for certain outpatient treatments like dialysis, chemotherapy and radiotherapy as well as treatment of a number of chronic diseases like diabetes and hypertension. Besides using MediSave for medical treatments, you can use MediSave to pay the premiums of approved medical insurance schemes which are MediShield Life, private Integrated Shield Plan and ElderShield/ElderShield Supplement.

When you contribute to MediSave, you enjoy:

  • Up to 6% interest per annum on your MediSave savings. Savings in the MA earn 4% interest per annum, and the first $60,000 of your combined CPF balances earns an additional 1% interest per annum (with up to $20,000 from the Ordinary Account (OA)). If you are aged 55 and above, you will also enjoy an additional 1% interest per annum on the first $30,000 of your combined CPF balance from 1 January 2016.

Tax relief of up to 37% of your annual net trade income (NTI), or the CPF Annual Limit of $37,740 from 2016 onwards, whichever is lower. Thus, the MediSave Scheme complements your IP coverage as its usage is generally wider. For example, MediSave can be used to pay for convalescence and palliative care in approved convalescent hospitals and hospices respectively. You can also use MediSave to pay for chronic disease treatments, outpatient scans and screening mammogram, which may not be covered under IPs. I hope this clarifies.

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Eric Chia
Eric Chia, Senior Financial Consultant at Prudential
Level 4. Prodigy
Updated on 27 Jun 2019

Even though integrate shield plans cover the hospitalization bills, it's not entirely foolproof. The following considerations may need you to use Medisave instead of your ISP and rider:

1) 5% co-pay of hospital bills for folks who signed up for ISP riders after 8 March 2018

2) childbirth, cosmetic and dental uses, plus other exclusions from ISP and rider

3) long term medication care, including medicine and polyclinic visits not linked to any hospitalization episode

4) final expenses, unless you're comfortable with your children paying or allowing final expenses to take up part of the legacy you're leaving for your children

This is also why Medisave account has a limit (that not many people are aware of). Any amount contributed in excess of $57.2k (as of writing) will be channelled to your CPF-OA Account, which earns interest of 2.5%p.a. and can be withdrawn after 55 or through CPF life.

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Junda Huang
Junda Huang

27 Jun 2019

Agree. Just 1 thing to add though, any excess above MA's maximum limit will spill over to SA first until SA hits FRS. Only after SA hits FRS will any amounts in excess of MA spill over to OA :)
Jennifer Goh
Jennifer Goh
Level 4. Prodigy
Answered on 14 Jun 2019

It is the government's interest to implement its policy once it is decided, if it is not made compulsory, it'll just be like the "Do not litter" sign.

Medisave scheme is like a form of safety net designed to help Singaporeans save for their healthcare needs despite the rigidity of this policy.

Like every schemes implemented in Singapore, each policy has its own pros and cons...let us all try to look at the brighter side of life :)

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