Medisave Minimum Sum to be scrapped

SINGAPORE — Singaporeans who are unable to meet the Medisave Minimum Sum — which stands at S$43,500 — will soon not need to top up their accounts before being able to withdraw Central Provident Fund (CPF) monies at age 55, with the requirement set to be removed next year.

From January, the Government will instead recommend that they have S$49,800 in their Medisave accounts — to be known as the Basic Healthcare Sum (BHS) — to pay for subsidised healthcare expenses in old age.

The BHS replaces the Medisave Contribution Ceiling, the maximum balance a CPF member can save in his or her Medisave Account. Any Medisave contributions above the sum will be put in the CPF Retirement and Special accounts.

The BHS — which is 2.7 per cent higher than the existing Medisave Contribution Ceiling — will be adjusted annually after next year to keep pace with the growth in Medisave use by the elderly, said Health Minister Gan Kim Yong yesterday in Parliament.

This is needed as people live longer, healthcare costs rise and Medisave use is made more flexible.

The changes are to fine-tune and simplify Medisave rules and make them easier to understand, said Mr Gan in the Ministry of Health’s (MOH) Committee of Supply debate.

Experts TODAY spoke to said the Medisave Minimum Sum has outlived its purpose, because of the changing healthcare financing landscape.

To give Singaporeans greater certainty on how much they should keep in Medisave for retirement, the BHS will be fixed for each cohort when they turn 65. This approach is similar to the one adopted for the CPF Retirement Sums.

While a proportion of CPF members do not meet the BHS — the MOH said about six in 10 active CPF members who turned 55 between 2009 and last year met the Medisave Minimum Sum — recent moves by the Government are likely to help more people save enough in their Medisave.

Medisave contribution rates for employers were increased by one percentage point from this year and the Government also provides periodic top-ups, especially for the lower-income and elderly.

Associate Professor Phua Kai Hong of the Lee Kuan Yew School of Public Policy felt most people below the age of 55 currently would be able to save up to the BHS amount.

This is partly because challenges faced by CPF members who had to foot their parents’ medical expenses, or pay a significant proportion of bills for catastrophic illnesses, have been addressed through the Pioneer Generation Package and MediShield Life.

MediShield Life, which provides universal coverage against large hospital bills, will be rolled out at the end of this year.

Health Government Parliamentary Committee chairman Chia Shi-Lu agreed, saying that new schemes coming onstream will reduce the burden on Medisave.

“In the past you needed to have more (in Medisave) because MediShield wasn’t as comprehensive as it could be, and that’s why you need this buffer,” he said, adding that the Medisave Minimum Sum requirement had put some in a bind.

“In the past, a lot of people didn’t have MediShield or (perhaps did not qualify for an) insurance plan, their only recourse was Medisave. This has now changed with MediShield Life, which will cover most catastrophic illnesses and cover everyone. So, the question remains, do you really need a minimum sum in your Medisave?”

Mr Gan also announced greater flexibility for Medisave: Four additional chronic diseases will be covered under the Community Health Assist Scheme and Medisave use from June this year. The addition of epilepsy, osteoporosis, psoriasis and rheumatoid arthritis brings the total number of conditions under the Chronic Disease Management Programme to 19.

Patients with these conditions will be able to use up to S$400 from their Medisave per year for treatment, and receive up to S$120 in subsidies per visit at a participating general practitioner’s clinic, if they are on CHAS.