Portable Medical Benefits for Employees
In a volatile business environment, an employee can expect to change employers more frequently in his working life. With each change, the employee may lose his medical benefits provided by the respective employer. The tripartite partners have been encouraging employers to enhance the portability of inpatient/hospitalisation medical benefits. To incentivise employers to make the move, the Government has revised the tax policy to allow employers implementing any of the following three portable medical benefits options to enjoy higher tax deduction for medical expenses of up to 2% of total employees’ remuneration (the normal tax deduction limit is 1%):
||Summary of main features
|a) Portable Medical Benefits Scheme (PMBS)
Employer makes additional contribution (at least 1% of gross monthly salary, subject to a minimum contribution of $16 per month) to employees’ Medisave account every month.
Employees will use the Medisave contribution to purchase Medishield or Medisave-approved medical insurance to cover their inpatient needs. Information on such insurance is available at the MOH website.
|b) Transferable Medical Insurance Scheme (TMIS)
- An enhanced group hospitalisation & surgical insurance purchased by employer.
- It offers extension of inpatient coverage up to a maximum period of 12 months when an employee leaves employment.
- Employee covered under TMIS plans will be treated as continuously insured when he joins a new employer who has also purchased a TMIS plan. An employee will not be excluded from coverage even if he has a pre-existing illness before joining the new employer.
|c) Provision of Shield plan (i.e. MediShield or Medisave-approved private integrated plan)
- Employer provides inpatient medical benefits in the form of Shield plan to his employees.
- Employer, after deciding his choice of Shield plan, may pay the premium of the chosen Shield plan (e.g. Enhanced IncomeShield Basic Plan) on behalf of his employees directly to the insurance company or reimburse the amount of premium into his employees’ Medisave accounts.
- If an employee has already bought a Shield plan provided by other insurance company (e.g. AIA HealthShield) and does not want to change his plan, employer can simply credit the amount of premium of the Shield plan the company has chosen (e.g Enhanced IncomeShield Basic Plan) into the employee’s Medisave account.
Qualifying conditions for 2% tax deduction limit
Employers implementing PMBS
Employer should implement PMBS for at least 20% of the local employees1 employed by him as at the first day of the financial year being assessed and all local employees who commence their employment during that financial year.
For full time employees, the additional monthly contribution to Medisave account should be of at least 1% of an employee's gross monthly salary, subject to a minimum amount of $16 per calendar month.
For part-time employees2 , the additional monthly Medisave contribution should be computed based on 1% of their actual gross salary for the calendar month.
Employers implementing TMIS
Employer should implement TMIS for at least 50% of local employees employed by him as at the first day of the financial year being assessed.
Employers providing Shield Plan
Employer should provide Shield plan for at least 20% of the local employees employed by him as at the first day of the financial year being assessed and all local employees who commence their employment during that financial year; and
Employer should pay Shield plan premium on behalf of his employees direct to the insurance company or reimburse the premium into his employees’ Medisave accounts.
1 Local employees refer to Singapore citizens or PRs employed on a full time or part-time contract of employment, regardless of the number of hours worked.
2 The definition of part time employees will follow that in the Employment Act.
Encouraging employers to make ad-hoc Medisave contribution
To encourage employers to make ad-hoc Medisave contribution as and when they can afford it, additional tax deduction beyond the 1% limit will be allowed for the amount of ad-hoc Medisave contributions made, even if employers are not adopting any of the portable medical benefits Options (i.e. PMBS, TMIS or provision of Shield plan). The total tax deduction for medical expenses will be subject to the overall cap of 2%.
Additional Medisave Contribution and Tax Exemption for Employees
To cater for the additional Medisave contribution under PMBS, Provision of Shield plan and ad-hoc contribution, the limit of additional Medisave contribution has been raised to $1,500 per year. The tax exemption limit for employees for additional Medisave contribution is $1,500 per year.
An employer who wishes to make additional Medisave contribution for his employees may register with the Employer Registration Section of CPF Board for a new CPF Submission Number (CSN).
Frequently Asked Questions
Please refer to the set of Frequently Asked Questions for more information on Portable Medical Benefits for Employees.
Enquiries can be made with:
- CPF Employee Call Centre at 1800-2271188.
- Inland Revenue Authority of Singapore at 1800-3568300 (individual income tax), 1800-3568622 (corporate income tax) and 1800-3568611 (business income tax)